The United Steelworkers of America filed suit in federal court yesterday charging eight tax-exempt foundations with illegal use of "employer moneys" to promote dissident challengers in a recent union election.

The allegation was denied by Joseph. Rauh Jr., attorney for the challengers, who countercharged that the suit is "transparent effort to intimidate public interest foundations from continuing to assist union reform groups seeking fair elections."

The suit, field in New York, represents the latest in a series of legal aftershocks from last year's bitter battle for the presidency of the 1.4-million-member steelworkers union in which Lloyd McBride, with backing from the union's top officials, defeated challenger Edward Sadlowski. Sadlowski has filed suit in federal court here to overturn the election.

At a press conference, McBride charged that the Landrum-Griffin Act's ban on use of employer funds on behalf of a union candidate was violated because the foundations have a $16 million interest in companies that employ USWA members and channeled at least $100,000 to the Sadlowski campaign through the Association for Union Democracy, (AUD), a New York-based group.

The foundations "channeled moneys and assets to the AUD, and to other conduits as yet unknown, in the guise of ostensibly nonpartisan grants" that "in actuality . . . were intended by all the defendants to be used for biatantly partisan activities promoting the Sadlowski slate," the suit charged.

The foundations' activities included recruiting and training election observers, providing campaign services and giving free legal assistance, all exclusively for the Sadlowski forces, the suit alleged.

H.W. Benson, excecutive director of the AUD, said the services were provided to "guarantee legal rights," not to promote a political candidate, and denied that the foundation money amounted to employer contributions. "There are foundations that support liberal causes," he said.