The Carter administration told Congress yesterday it strongly supports legislation setting national minimum standards for no-fault auto insurance as "a matter of national conscience."

Transportation Secretary Brock Adams, at a hearing of the Senate Transportation Committee, suggested rapid action on a bill sponsored by Sen. Warren Magnusoon (D-Wash.) which sets minimum levels for no-fault laws in every sate.

Adams was backed by Douglas Fraser, president of the United Auto Workers, who said the UAW is "convinced beyond any doubt" the present insurance system "should finally be relegated to a museum."

Fraser suggested some revisions in the Magnuson bill but said experience in individual states had shown a no-fault system "has eliminated the inadequacies, injustices, wastefulness and chaos associated with the fault-based insurance system."

No-fault laws required automobile insurance companies to pay claims without regard to who was at fault.The system is designed to avoid the high costs of determining which company should be liable.

"This administration and the Congress have been working hard to find ways to make automobiles safer and less polluting," said Adams. "As a matter of national conscience, we must turn next to aid the automobile accident victims."

In 16 states now with no-fault laws, he said, "no-fault is compensating more victims, more completely, more quickly and more equitably for their economic losses than did the tort liability system."

Although Adams endorsed the Magnuson bill, he said he "would hope and expect that most states, and ultimately all states, would choose to adopt a much stronger no-fault plan."

The Magnuson bill would limit medical and rehabilitation benefit levels to $100,000. No-fault policies also would be required to reimburse the purchaser up to $12,000 in lost wages.

All states would have three years to adopt a no-fault plan at least as restrictive as the federal plan or to adopt the federal plan.States could have the option of administering the federal plan or turning that job over to the Transportation Department.

The Magnuson bill also defines a "threshold" at which seriously injured accident victims may overstep the bounds of no-fault and sue other motorists for tort liability.