The National Conference of Catholic Bishops is dismissing its most noted human rights activist, as a budget-balancing measure.

Msgr, George Higgins, 62, who has 33 years of service for the conference and its precedessor, the National Catholic Welfare Conference, will be terminated at the end of 1979 as part of the hierarchy's efforts to prevent a deficit. Higgins will lose his job only a year before his scheduled retirement.

Bishop Thomas C. Kelly, general secretary of the conference, said the decision was "just another budgetary decision" and did not reflect any change in the church's commitment to social justice concerns.

Dismissal of the priest who symbolizes Catholic involvement in civil rights, problems of migrant workers and three decades of labor battles may draw portests from both in and out of the church.

"It's really a scandal," said Msgr. Gino Baroni, who is currently assistant secretary for neighborhoods at the Department of Housing and Urban Development. He said he was "in tears" which he learned Friday of Higgins' termination.

"I wouldn't be doing what I'm doing if it wasn't for George Higgins," said Baroni. "He was a symbol to me, to a lot of us, as young priests: an example."

He added: "I am sure there will be moves to ask the bishops to reconsider." The bishops will hold their annual meeting here next month.

Higgins voiced no bitterness about the termination. On the contrary, he expressed gratitude to the conference leadership for giving him "complete freedom" in his work "to do just about anything I wanted to do."

In addition to holding a number of consultative and advisory posts within the church. Higgins is chairman of the public review board of the United Auto Workers and a member of the executive committee of the Leadership Conference on Civil Rights. Last year he was an adviser to Ambassador Arthur Goldberg at the Belgrade follow-up conference on the Helsinki Accords.