The American Meat Institute, claiming that a new Department of Agriculture regulation concerning the use of nitrites in bacon "has the potential for causing the closing of most of all bacon processing plants and destroying a multibillion-dollar industry," filed suit in U.S. District Court here to block enforcement of that regulation.

The regulation under attack, announced last May, attempts to limit the levels of nitrosamines in bacon. Nitrosamines, which have been found to cause cancer in a variety of animals, are formed when sodium nitrite combines with amines when bacon is cooked.

The new regulation sets a level of 120 parts per million of the amount of sodium nitrite to cure the meat and requires that it be used only in combination with 550 ppm of sodium ascorbate or sodium erythrobate, both of which inhibit nitrosamine formation.

The suit does not question these levels, which it finds acceptable, but sharply objects to the method of testing and analysis the Department of Agriculture intends to employ to determine whether or not processed bacon has more than the acceptable limit of 10 parts per billion of nitrosamines.

The suit alleges that the department will be using technology essentially available only to it, with the result that bacon processors around the country will not know before their product is tested whether they meet government standards. In addition, the suit charges that the technology, although highly sophisticated, does not produce consistent results on the same sample.

Beyond that, the suit says, if bacon is tested at the processing plant, it is more likely to show a higher level of nitrosamines than if it is tested later, since the passage of time tends to lower nitrite levels in bacon.

Under the new regulation, for which testing is scheduled to begin Sept. 15, any time a single sample is found to have higher than acceptable levels of nitrosamines, the entire output of that processing plant will be quarantined until samples from five consecutive lots are found to be acceptable.

The Agriculture Department regulation was issued before the Food and Drug Administration released in mid-August the results of a study that found that sodium nitrite causes cancer in labortory animals. Nitrites are commonly used in meats to prevent botulism or just to give characteristic color and flavor.

The meat institute, an industry group, says it represents processors of 90 percent of the bacon produced in this country.

A hearing has been scheduled for Tuesday before U.S. District Court Judge Oliver Gasch to set up a schedule for filing papers in the suit.