Labor negotiations between the American Ballet Theatre and its dancers collapsed today, and ABT suspended all rehearsals, locked out the dancers and canceled its scheduled two-week October engagement in Paris.

Both ABT and the dancers' negotiating committee agreed, however, that substantial progress had been made in the past two days. Still, the lockout was expected and about 68 persons, many of them dancers, began picketing across from Lincoln Center this evening.

The dancers have been requesting financial parity with the generally much-higher-paid artists of the New York City Ballet. ABT had called the request "impossible" until two days ago.

Before negotiations were suspended today, however, ABT agreed in principle with the dancers' parity request. ABT's latest offer--it specifically declined to call the proposal a "final" offer--was made with the stipulation that if it was rejected, a lockout would follow.

The dancers voted down the offer 80 to 2.

Charles Dillingham, ABT's general manager, issued an official statement today that character- izes management's offer as representing "an increase of over 30 percent in base wages for the three years of the contract. . . . In light of the current economic climate, we regard this as a substantial offer."

The dancers' spokesman, Frank Smith, said, "We cannot afford to continue working under . . . unfair conditions. We feel the management has not seriously considered our most urgent needs . . . and seeks to starve us out. . . . Management continues to neglect our basic needs for a decent standard of living . . ."

ABT had offered to continue rehearsals and to keep negotiating beyond the expiration of the old contract Tuesday if the dancers would give the company a no-strike pledge for the coming season. The dancers declined to do so.

Sources close to both sides of the negotiations commented that had bargaining begun several weeks ago rather than last week, terms for a new contract would have been reached this morning.

Sources among the dancers accused ABT of foot-dragging early in the discussions but said management changed its pace and avidly sought a settlement during several around-the-clock sessions this week.

An ABT official who asked not to be named said another, slightly better offer would eventually be made. He criticized, however, the unavailability of the dancers' attorney, Leonard Leibowitz, and said the dancers had requested that no negotiating take place while Leibowitz is away. Leibowitz is to be married this evening and to be honeymooning until next Tuesday.

Roger Stevens, chairman of the Kennedy Center and a board member of ABT, said today that ABT "made the dancers a pretty good offer."

Stevens said that the Kennedy Center "will sit for awhile" before deciding what to do about the possibility that ABT will not settle the dispute in time for the ballet company's four-week Washington season in December. Stevens recalled that "We did before. We sat through the whole damned thing" three years ago. At that time, ABT's Kennedy Center season was canceled one week at a time because of the lockout.

Now, Stevens added, "We'll make a decision in the middle of October" if no settlement is in sight by then.

One ABT executive said a long layoff was now likely because of the Paris cancellation. He asserted that the Paris engagement had been canceled quickly in order to give the theater there adequate time to find another attraction. The theater has been advertising the event for about six months.

But there were repeated complaints by some dancers and culture-industry observers that ABT was seeking an excuse to cancel the Paris engagement because of financial problems and thus welcomed a labor dispute. The allegations were denied by ABT.

One ABT official acknowledged that most of $250,000 ABT expected to spend on the Paris visit had yet to be raised but said that this potential burdensome deficit was not a factor in the lockout.

In addition to the jettisoned $250,000 Paris expense, ABT would have had to spend about $100,000 per week in Manhattan on rehearsals, which had begun several days ago.

With Paris out, far fewer rehearsal weeks are now needed, and ABT is not scheduled to perform until the week of Nov. 28. One management source said a five- to six-week lockout was probable.

A number of dancers said they expect at least a month-long lockout. The company's 1979 dispute with its dancers ran for more than nine weeks. New York State law prohibits the payment of unemployment insurance to workers involved in a labor dispute for the first seven weeks of the dispute.