A House committee today approved a bill that would establish a new lottery game, to be called "Lotto," that could generate $26 million in new revenue for financially beleaguered local governments in Prince George's County and Baltimore City.

The 15-to-7 favorable vote by the House Ways and Means Committee was crucial to Prince George's, which has been unable to muster committee support for another proposal that would allow the county to increase its surtax on the state income tax, a plan that could produce $20 million.

In other legislative action today, Gov. Harry Hughes successfully lobbied for passage of his favorite project, a new labor department, in a key Senate committee. Story on Page B5.

Prince Georges's, which faces a predicted $30 million budget shortfall this year, also has proposed legislation, primarily affecting utilities, that would increase personal property taxes by $10 million. The committee is expected to act favorably on that measure next week.

The lottery proposal, backed by Del. Gerard F. Devlin (D-Prince George's) and Del. Dennis C. McCoy (D-Baltimore City), unexpectedly surfaced last week when it became clear that the measure could win support from Prince George's and Baltimore delegates on the committee.

"We are desperate for something," said Devlin.

The money generated by Lotto, estimated at $40 million in the first year, would be returned to the localities in proportion to each jurisdiction's overall lottery sales, including sales of Instant Lottery game tickets. Under that formula, Prince George's and Baltimore City would receive the largest shares of the Lotto pot:

3.5 million and $12.6 million respectively.

Del. Mary Boergers (D-Mont-gomery) voted against the proposal, charging that the formula is "inequitable" because there are many more lottery outlets in Prince George's and Baltimore City than elsewhere.

The committee delayed action on the income tax surcharge until next week. Although that measure appears doomed, Prince George's leaders say that they will continue to press for it if the lottery proposal fails.

Committee action on the personal property tax measure also was delayed, pending preparation of an amendment that would exempt Montgomery County--which shares some utility service with Prince George's--from any cost increases. With that amendment, Devlin says, he has enough votes in the committee for passage.

The bill the committe approved today would authorize Lotto effective July 1, but lottery commission officials said that it would take several months to organize the game.

Players would pay a fixed amount, perhaps 50 cents, to select six numbers in whatever sequence they wish. Winning numbers would be drawn weekly, hence the game's nickname as "the Saturday night special."

The odds against winning the grand prize by matching all six of the numbers in order are estimated to be 250,000 to 1, Devlin said.

Sen. Laurence Levitan (D-Montgomery), whose budget and tax committee first would consider the measure in the Senate, said today he is concerned that Lotto might reduce the state's income from the Instant Lottery game.