Virginia Gov. Mills E. Godwin, said today he will veto legislation that would have designated New Year's Day a state holiday honoring slain civil rights leader Dr. Martin Luter King.

The sponsor of the measure, the Senate's only black member, said the veto by Godwin, a Republican now ending his second term as governor, would "incense" blacks across the state and drive them to polls in overwhelming numbers to vote for a Democrat to replace Godwin in the November elections.

Godwin, who has sought to project a progressive image on racial matters as governor, announced the veto at a news conference where he also discovered that despite some misgivings, he will sign legislation that will block the state's cities from annexing any suburban territory for another 10 years.

He also announced he is vetoing bills that would have granted incrased financial aid to cities set up special grievance procedures for policemen and teachers, and was signing a controversial amendment to the state's Freedom of Information Act, opening all legislative meetings to the public.

Although most public attention had been focused on what Godwin would do with the annexation measure, his veto of the Martin Luther King holiday bill is expected to be more controversial. The bill had been offered by Sen. L. Douglas Wilder (D-Richmond) and had passed both houses of the legislature by lopsided margins and with virtually no debate.

In an effort to forestall controversy over the measure, King's birthday would have been celebrated Jan., although Kind was born Jan. 15. By celebrating it on Jan. 1, state workers would not be given an extra paid holiday, supporters of the bill said.

But Godwin, who was leading segregationist forces in the Virginia legislature before King was leading civil rights protests, told newsmen, "We have enough legal holidays in Virginia."

Besides, he said, "the state does not even have holiday set aside for many of its famous leaders, including Thomas Jefferson "who was an eminent a Virginian as ever held public office."

Racial feelings, Godwin said in response to a question, had "absolutely nothing to do" with his veto. "Dr. King was certainly a great leader and accomplished much in his lifetime," the governor said.

"I would also point out only one non-Virginian, Columbus, has a state holiday set aside for him," Godwin said in a prepared statement. "Robert E. Lee shares a holiday remembrance and day with Gen. (Thomas 'Stonewall') Jackson," another Confederate leader, he said, adding that "six Presidents born in the state do not have holidays set for them.

Wilder said, "The unfortunate thing is that the governor - who has said he wanted to change in this four years the image he had (on race relations) in his first four years - has done this as one of the final acts of his administration."

The governor said he was agreeing to sing the annexation bill only after assurances from the Virginia Association of Counties that they would work during the next session of the legislature to secure passage of legislation that would attempt to resolve the controversy over annexation procedures.

"Annexation has been burning and frustrating issue before the General Assembly for 50 uears," Godwin said, "and I believe there is a genuine desire that it be settled."

The 10-year moratorium bill passed the legislature only after a bill that would have attempted to resolve the issue failed. That bill, which would have granted annexation immunity to heavily populated counties, failed in the Senate under intense lobbying by urban legislators. Representatives of the Virginia Municipal League earlier this week attempted to assure Godwin that there would not be an immediate deluge of annexation suits if the current moratorium, which began in mid-1972, were ended by his veto of the bill.

But some legislators warned the governor earlier that they expected as many as seven such suits would be instigated if he vetoed the moratorium bill. Godwin said he was signing the bill with assurances that the next legislature would attempt to shorten the moratorium to two years if efforts to resolve the annexation issue fail then.

"A decade is too long to say to the cities of Virginia that nothing can be done about annexation or future growth," he said.

Goodwin's vetoes of the bills that would have established special grievance procedures for policemen and teachers were not unexpected. He vetoed a similar bill affecting policemen last year and has repeatedly said that he does not favor separate procedures for different classes of state workers.

Despite strong opposition from some journalistic groups, Godwin said he was signing amendments to the state's Freedom of Information law designed to force all of the legislature's committees to meet in public. The bill, sponsored by Del. James H. Dillard (R-Fairfac), was aimed at ending the secret deliterations over the state's budget by members of the House Appropriations Committee and the Senate Finance Committee.

What angered the journalistic groups was a provision of the bill that would exempt "informal" meetings of public officials if the meetings were not planned to transact public business. The journalists groups said the provisions might lead to more - not fewer - secret meetings and urged Godwin to veto the bill.

In vetoing the bill that would have increased state aid to cities, Godwin was following the advice of legislators who had planned that bill as a companion to the annexation bill that died during the session. Godwin said the bill would have cost the state about $34 million in the next biennial budget and urged that the matter be given further study along with the annexation question.

Godwin also signed bills requiring new automobilies to undergo inspections only once in the first year after their purchase instead of twice, and a bill creating a state department of general services.

By late today Godwin had finished acting on all but "a couple of dozen" of the 719 bills approved by the legislature at its 52-day session earlier this year. A spokesman for the governor said Godwin will complete action on the bills by the midnight Sunday deadline and announce his final decisions Monday morning.