President Carter, describing the United States as the world's largest arms peddler, intends "before long" to offer the Soviet Union proposals to limit sale of conventional weapons around the world.

In proposing for the first time a major power agreement to put controls on the $20 billion-a-year industry, Carter said, "We all feel that it should be cut back. How to do it is another matter, of course, that is very difficult to address."

"We are the worst violator at this time, the Soviets perhaps next, and the French, British and Belgians, to some degree, participate in this excessive arms sale," he said.

The proposal comes at a time when Carter's arms policy is under mounting criticism both inside and outside government.

The President announced a unilateral policy of restraining U.S. sale of conventional weapons six months ago, saying that the spiraling arms traffic" represented a "threat to world peace." Little, however, has been done since.

Carter made his statements during an interview with a group of visiting newspaper columbists and editorial writers Friday. A transcript of the 43-minute interview was released yesterday.

During the White House session, the President also staunchly defended a joint U.S.-Soviet communique on the Mideast issued last month, said the effort to get international cooperation in thwarting airline hijackers, and said he would sign a bill allowing retired persons to earn all they can without losing Social Security benefits.

The joint U.S.-Soviet statement, which urged Israel to recognize the rights of Palestinians, stirred widespread criticism from Jewish groups around the country, who charged it represented a retreat from long-term commitments to Israel.

Carter, in his interview, however, defended it as "a major step forward" and said, "I have never violated my commitments made to the Israelis, either by my administration or by previous administrations."

The President said he recently reviewed all public and private agreements between the two countries with Israeli Foreign Minister Moshe Dayan. "There has not been and will not be any violation of those commitments," he added.

The Soviets, Carter said, are now taking "a much more objective and fair and well-balanced position" in Mideast affairs and have abandoned their earlier demands for creation of an independent Palestinian homeland.

Commenting on a move by the House this week to lift a $3,000 limit on the amount of money retired persons can earn and still collect Social Security, Carter said he "deplored" the current limit.

He said he was uncertain if Congress will approve a complete elimination of the limit. But, he added, "I don't think the cost in the Social Security system is likely to be very high, and I would certainly sign a bill that had the provision in it."

The White House previously has expressed concern that removal of the earnings limit would require too great a tax increase. The House Thursday approved a bill imposing massive new Social Security taxes.

He also claimed he had made peace with black leaders, who have been critical of the Carter administration's efforts to deal with urban problems. He said he believes the administration and Congress have reached "the limit" of what they can do this year, considering time and budget restraints, to create more jobs and better housing for blacks.