The Office of Personnel Management has withdrawn its threat to ban the American Federation of Government Employees from providing insurance for federal workers because its health plan includes non-emergency abortion coverage.

In the meantime, lawyers for OPM yesterday contended in a new legal argument that by law congressional budget action prohibits any abortion coverage in health plans for federal employes.

U.S. District Court Judge Gerhard A. Gesell told the government last Thursday it would have to allow federal health plans to include abortion coverage because it had failed to show that such coverage was specifically precluded by law.

Gesell's ruling came in a lawsuit brought by the union alleging that OPM director Donald J. Devine had exceeded his authority when he unilaterally ordered elimination of abortion benefits from federal health care plans, except in cases where the woman's life is in danger. Gesell said in his decision the abortion coverage would have to be included in the AFGE plan unless the union voluntarily agreed to remove it.

The day after Gesell's ruling, Devine told AFGE President Kenneth T. Blaylock the union would either have to agree to eliminate the coverage or else OPM would refuse to let AFGE provide health insurance for federal workers. But Devine's letter, which appeared to directly contradict Gesell's ruling, was abruptly withdrawn on Tuesday.

Instead, the government yesterday asked Gesell to consider its new argument that there is a law that prohibits nonemergency abortion coverage. After a government lawyer assured Gesell that abortion coverage would be provided unless there was further court action in the case, Gesell declined to hold OPM in contempt of court, as the union had urged.

The government contends that a House-approved amendment to the appropriations act, which prohibits non-emergency abortion coverage, was put in effect by congressional budget action on Oct. 1. That action continued appropriations to government agencies through Nov. 20 until Congress can act on the 1982 appropriations bills.

A Senate committee has rejected that same antiabortion amendment. The government, however, cited a portion of the budget action which says if the House and Senate have acted differently by the time the budget question arises, funds will be continued under the more restrictive of the two actions.

Thus, the government contended that the House action should prevail and that abortion coverage, beyond that needed to save the life of a woman, must be excluded from federal employe health benefit plans.

Gesell said he expects to rule on the government's argument today after AFGE has a chance to respond.