The Carter administration will allow American contractors to repair Egypt's fleet of Soviet Mig fighter planes, the State Department said yesterday.

Alfred L. Atherton Jr., assistant secretary of State for the Near East, told a House International Relations subcommittee that the repairs would arrest the deterioration of Egypt's fighters and would not affect significantly the Arab-Israeli military balance.

Rep. Stephen J. Solarz (D.N.Y.) countered that "you are taking a significiant step forward" by helping Egypt put lethal, offensive weapons in fighting condition. He said State should give "serious consideration" to making such maintenance arrangements subject to congressional approval.

General Electric engine technicians and Lockheed airframe specialists would fix up Egypt's fleet of about 200 Mig-21 fighters under the arrangement the firms are negotiating with Cairo.

Modern jet engines and airframes have common characteristics the world over. General Electric, which manufactures jet engines for the American military, and Lockhleed, which has built U.S. fighter plances, both have technicians with the know-how to work on Soviet aircraft.

Atherton said the American technicians would work on the Soviet-supplied planes in a European country which he did not identify, not on the ground in Egypt. He denied a report that the fighters would get brand-new Rolls-Royee engines, declaring the idea was to return the planes to their original condition rather than improve their performance.

The State Department told General Electric and Lockheed about a month ago, according to Atherton, that the administration would have no objection to their working out a maintenance agreement with Egypt. State, but not Congress, will have to approve the service contract after it is negotiated.

Such maintenance, Atherton said, "simply will prevent a futher erosion of present operational capabilities." The U.S. firms are best qualified to perform the maintenance, he said, but Egypt possibly could turn to another western country if the proposed deal falls through.

Egyptian President Anwar Sadat "can't afford to let" his air force "deteriorate indefinitely," Atherton said. He described many of the Mig fighters as "inoperable."

The proposed repair agreement dominated the hearing called to hear the administration's case for selling Egypt 12 pilotless reconnaissance planes, called drones, and 14 more Lockheed C-130 transport planes to give Egypt a total of 20 of the transports. Six C-130s have been delivered under terms of the sale made last year.

Egypt will pay $66.5 milliom for the drones and $184.4 million for the 14 C-130s, Atherton said. Atherton indicated Saudi Arabia may foot the bill.

"Given American interest in supporting Egypt's cooperation in our search for a genuine peace in the Middle East," Atherton said, "we clearly have a major interest in helping Egypt meet its legitimate defense needs."

Subcommittee chairman Lee H. Hamilton (D-Ind.) told Atherton the Ford admininstration, in getting permission last year to sell the first sixC-130s to Egypt, "gave us assurances" that this would not "start a millitary relationship with Egypt."

But the newly proposed drone and C-130 sales, together with the maintenance arrangement, indicate that "we've come a considerable distance since April, 1976," Hamilton said.

Rep. Benjamin S. Rosenthal (D.N.Y.) said State had been "a little bit sneaky" in approving a maintenance deal that did not require congressional review. He argued that the maintenance arrangement and the drone and C-130 sales are so "inextricably intertwined" that that the sales should not be approved until Congress knows the full details on the repair deal.

The subcommittee took no action yesterday on a resolution authored by Rep. William Lehman (D-Fla.),disapproving the sales.