State governments are willing to foot more of the bill for dams and other water projects but they will jealously fight for control over allocation of scarce water supplies.

That was the message given to Interior Secretary Cecil D. Andrus yesterday by a delegation from the National Governors, Association which included governors from Utah, Colorado, Massachusetts and Wyoming.

The news that the state would willingly pay part of the billions of dollars that the federal government spends on water projects was "a surprise," Andrus said. It means, he added, that the states will have to choose among the many proposed navigation, irrigation, and flood control projects.

Congress has approved, but not yet funded 828 water projects worth $32 billion. President Carter is considering a comprehenvise new water policy, under which amny of the projects might be cancelled as uneconomical. If states had to help pay for them, many would never be build, Carter officals reason.

In a press conference yesterday, Andrus and Utah Gov. Scott Matheson tried to play down the confrontation over water policy that has occured between the administration and western states ever since Carter tried to kill 18 water projects last spring.

Andrus denied the administration is softening its water policy and predicted the policy to be announced late this month, would be controversial. Citing, for example, the severe groundwater depletion in Kansas and Arizona, he said, "The Carter administration won't run and hide from these problems.

Matheson warned that state water law "must remain sacrosanct - any federal effort to invade it would become a loggerhead issue." He added that conservation of water - which Carter says will be the "keystone" of his new policy - is a state policy matter.

Environmentalist want the administration to require conservation measures - such as irrigation efficiency standards and urban water meters - as conditions for federal water funding.

Asked about such options, Andrus said, "We could do that, but we'd much rather word with the states. I hope we won't have to . . . impose sanctions."

Matheson said conservation should include building dams to store water - a pratice Carter would like to curtail in favour of using less water. The Utah governor also said the state oppose any effort to change the discount rate on projects authorized but as yet unfunded. Andrus, however, favours increasing the rate - a complex formula used to calculate project benefits - which would kill a number of costly dams.

Another "loggerhead" issue would arise if the administration seeks legislation requiring federalwater rights to be determined in federal court. States prefer to fight in state court, Matheson said.

States and federal agencies are wrestling over the water rights attached to federal lands, which cover the major portion of many western states. Parks, Indian reservations and other federal lands have rights which they have yet to claim, but the water in many cases has been allocated by the states to farmers, industries and cities.

While western issues are most controversial, castern states also have a major stake in the new water policy, Andrus said. Massachusetts Gov. Michael Dukakis and representatives from New York and other federal government should help cities repair antiquated water systems which leak thousands of gallons a day.