Flooded with members' protests that $6.5 million a year is too much, House leaders have agreed that the Select Committee on Assassinations' budget must be drastically cut or at least broken into smaller pieces so it appears so.

House speaker Thomas P. O'Neill Jr. (D-Mass.) said yesterday he expects the House will vote next Tuesday to reconstitute the committee to investigate the murders of President Kennedy and the Rev. Martin Luther King Jr. during the two years of this Congress.

O'Neill said he will appoint to the vacant chairmanship Rep. Henry B. Gonzalez (D-Tex.), who said yesterday he farvors a "gradual and orderly" approach to the investigation with the committee requesting funds "step by step" rather than all in one big bite.

During its three-month life until it expired with the 94th Congress Monday, the select committee's only public activity was to approve a one-year budget of $6.5 million prepared by chief counsel Richard A. Sprague. He told members if they were going to undertake the investigation of whether two assassins acted alone they should do the job right and that this would require a staff of 170 persons. If the probe lasted two years that would cost $13 million and be the most expensive investigation every undertaken by Congress.

Many members returning this week for the opening of the 95th Congress, said they couldn't vote for so much money. Democratic leaders talked with Gonzalez who from the start had opposed putting a price tag on the investigation. He agreed to redo the budget after the committee is given new life next week.

"I don't want to put a price tag on it now," Gonzalez said yesterday. "We will be in a position to justify every cent" when the committee appears before the House Administration Committee, which passes on investigative budgets. "Sprague is a highly experienced professional. He isn't padding it."

Gonzalez said that when Sprague first presented the $6.5 million budget to the select committee his initial reaction was "Oh, my God! But once he went into details I could see there was a case to be made" for the big budget. But Gonzalez said he prefers a "step-by-step approach. I'm not saying it may not eventually cost that much, but I don't want to ask for it all at once."

Rep. Samuel L. Devine (R-Ohio), senior Republican on the next committee and on the House Administration subcommittee that just initially pass on its budget, said he "wouldn't be surprised if the budget were cut by several million" if presented as it now stands.

Majority Leader Jim Wright (D-Tex.) and Minority Leader John J. Rhodes (R-Ariz.) agreed the budget figure should be reduced.

The resolution reconstituting the committee will be brought up under a procedure requiring a two-thirds vote, since the House Rules Committee has not been reconstituted to provide usual majority vote procedures.

The proposed $6,531,050 one-year budget included $3.6 million for salaries of 170 persons. The list includes a public information officer at $34,000 a year, a budget officer at $30,000 and an editor/historian at $22,000.

The $1,684,200 for domestic travel included funds for 80 attorneys/investigators to travel 10 days each month at average costs of $650 per trip.International travel for committee members and staff would total $180,000.

The proposed budget also contained funds to buy two "stress evaluators" and two "mini-phone recording devices" Rep. Don Edwards (D-Calif.), chairman of the House Judiciary Committee, civil and Constitutional Rights subcommittee, wrote the assassinations panel's outgoing chairman, Thomas N. Downing (D-Va.), expressing concern lest individual's constitutinal rights be violated by bugging or other types of secret surveillance.

Gonzalez said in an interview yesterday that he shares Edward's concern.

"I am very sensitive about intrusion on anyone's constitutional rights," said Gonzalez. "There will no secret surveillance of any sort."

Made public yesterday was letter sent to Downing last month by Rep. Frank Thompson Jr. (D-N.J.), chairman of the House Administration Committee, rejecting a request from the select committee to install "listening-in devices on two of its telephones. Thompson wrote owning that for committees to monitor telephone calls without the knowledge of one party was violation of privacy and a violation of law.

Gonzalez said he was told that the letter to Thompson though signed with Downing's name was in fact sent by a staff person without knowledge of either Downing or Sprague. He said the request would not be renewed.

Gonzalez said he expected the inveschez, and that he was born in Mexico, tigation would last the full two years of the 95th congress. He said he intended to conduct public hearings.

Assuming the House votes to extend the life of the select committee, it could then continue to spend at the December rate of about $60,000 a month until the House approves a permanent budget for it.