West German President Walter Scheel today sharply condemned foreign allegations of a fascist revival in West Germany as "irresponsible criticism . . . that could revive a spiral of prejudices and jeopardize European unity."

Although he did not specify where such allegations were coming from his remarks were widely viewed as directed at the anti-Germany tone reflected in some French, Italian and Scandinavian commentaries on recent terrorist and alleged neo-Nazi activities here.

"To say that there are fascist trends here today is to insult the dignity of this democracy." Scheel told an international conference of local government officials meeting in Hamburg today.

The president's speech appeared to be part of a government counterattack against foreign critics who suggest that they see old forces at work in the problems that have plagued the government of Chancellor Helmut Schmidt in recent months. These range from a revival of interest in the Hitler era and the escape from Italy of Nazi war criminal Herbert Kappler to a string or terrorist murders and kidnapings by the extreme left.

Thursday Schmidt himself lashed out at those unnamed foreign critics. The government is getting some moral support from foreign leaders, who may also be concerned over the criticism directed at Bonn.

French President Valery Giscard D'Estaing called Schmidt with a pledge of support last week, and President Carter and British Prime Minister James Callaghan have also called the beleaguered West German chancellor recently to offer support.