President Carter proposed yesterday to revamp the Law Enforcement Assistance Administration (LEAA) and rechannel $209 million in housing funds to rehabilitate and improve security in the nation's largest public housing projects.

The LEAA legislation, Carter and other administration officials said, would simplify the processing of anticrime grants to states and cities, reduce paperwork and change the grant allocation formula to funnel more money into high-crime areas.

The president, flanked by congressional and administration officials, announced the proposal amid much administration-produced fanfare in the White House Rose Garden yesterday morning.

"Every American is concerned about crime and every American is a potential victim of crime," Carter said, adding that because crime "destroys the fabric of society . . . we are all victims."

LEAA has been criticized for wasting money and spending huge sums with no discernible effect on the crime rate. Carter during his 1976 election campaign was particularly critical of the agency and promised a complete overhaul.

The president and the congressional leaders at the ceremony, including House Judiciary Committee Chairman Peter W. Rodino Jr. (D-N.J.) and Sen Edward M. Kennedy (D-Mass.), who is line to become chairman of the Senate Judiciary Committee next year, predicted strong congressional support for the legislation.

Absent from the ceremony, however, was Rep. John Conyers Jr. (D-Mich.) whose Judiciary subcommittee on crime will handle the legislation and who has strong reservations about the administration bill.

A spokesman for Conyers confirmed that he plans to introduce his own legislation to revamp the LEAA and that it differs significantly from Carter's proposal.

In any case, it is not expected that the legislation, which would extend LEAA for four years beginning in October 1979, will be acted on until next year.

The administration proposal, which Kennedy played a key role in shaping, would:

Create a National Institute of Justice within the Justice Department to consolidate and improve the federal government's civil and criminal research functions.

Create a Bureau of Justice Statistics in the Justice Department to collect, analyze and disseminate statistics on criminal and civil justice.

Replace annual grant applications with applications that cover three years, a step officials said could cut paperwork as much as 75 percent.

Change the grant formula, which is now based solely on population, to take into account such factors as a city's crime rate and the amount of money the state and locality spend combatting crime.

The legislation also would tighten restrictions on how LEAA grants can be used - banning, for example, the purchase of exotic equipment such as helicopters - and provide for greater citizen participation in developing LEAA grant applications.

Since the legislation would guarantee that no city or state would lose money under the new formula, providing additional funds to high-crime areas will depend on congressional willingness to appropriate more than LEAA's current $641 million a year.

The public housing aspect of the program will not require legislation. IT would use existing housing funds to improve conditions in public projects with 1,250 or more units - projects that are often riddled with crime, according to administration officials.

The $209 million includes $32 million in anticrime funds to improve security in the large projects.