With hurt and anger in his voice, Daniel Minchew yesterday told the Senate Ethics Committe that he had stood ready last year to cover up for financial wrongs atributed to Sen. Herman E. Talmadge (D-Ga) but was instead set up by the senator.

Minchew admitted that he was prepared to, and did, lie to insulate his former boss Taimadge from a secret bank account set up in the senator's name. But, he said, Talmadge betrayed him and went to the Justice Department with information that placed full blame for the scheme on Minchew.

"The ultimate insulation of Sen. Talmadge," Minchew said, "was that if it ever were traceable or it ever were discoverable, I would have taken the fall for him."

But, he told the Senate Select Committe on Ethics, Taimadge had assured him the matter would be hushed up between them. A short while later the senator went to Justice.

"I probably would have continued to provide that ultimate insulation," said Minchew, "if he had, prior to going to the Justice Department, said something to me other than, as he said, 'Let's hold this between us.'"

Minchew is the chief witness in the case Ethics Committee investigators are trying to make on five allegations of financial wrongdoing against Talmadge.

Testifying yesterday during cross examination by Talmadge's chief attorney, James Hamiton, Minchew said that Talmadge's son, Bobby, had demanded $25,000 in 1973 from the secret funds he kept for the senator.

According to Minchew, Bobby Talmadge telephone him and told him, "Momma says you can help me get some money. How much can you raise?"

Minchew said he negotiated for three months with young Talmadge before eventually making payments of nearly $10,000 to him from the account in $100 bills, Bobby Talmadge died in an accident in 1975.

During yesterday's testimony, Hamilton hammered away at Minchew, challenging him over the need for a secret account for campaign checks made out to cash that were given to the senator and questioning him about how a secret account with Talmadge's name on it could "insulate" the senator.

Minchew said the account was necessary to hide the cash from demands being made on Talmadge by his former wife, Betty, and his son. Talmadge and his wife were divorced in 1977 after a bitter separation.

Minchew did not appear as crisply confident in his answers under the rapid-fire cross examination by Hamilton yesterday as he had during more friendly questioning earlier this week by Ethics Committee special counsel Carl Eardley.

He hesitated for a moment before answering Hamilton's question about why Talmadge needed the special amount when he could have easily taken the campaign checks made out to cash, cashed them, and pocketed the proceeds without any complicated concealment.

That procedure, Minchew said uncomfortably, was not one of the options they discussed before he set up the secret account in 1973. Talmadge broke into a rare smile during the exchange between his lawyer and his former aide.

Minchew said he opened the secret account and routed more than $39,000 in improper Senator payments and campaign contributions through it with Talmadge's awareness. Talmadge has denied knowing of the account or benefiting from it. The senator has called his former chief aide and embezzler.

Why, Hamilton asked yesterday, did Minchew put Talmadge's name on the account if he wished to insulate his former boss? Minchew said that any other name would have drawn questions from bank officials if Talmadge campaign checks were deposited in the account.

After yesterday's hearing, Minchew's attorney, Robert Fierer, told reporters that he felt Minchew had done well. Talmadge's attorneys have said they will have at least another day of questions for Minchew about his own finances. Testimony in the hearing is to resume June 4.