The Department of Health, Education and Welfare will cut Medicaid and welfare payments to the states by $831 million next week because, it turns out, Congress was not kidding when it ordered a war on waste.

A last-minute bailout failed to materialize in the Senate yesterday because no one would propose increasing a supplementary appropriation, and HEW was left holding a dwindling money bag.

In an appeal last week, HEW Undersecretary Hale Champion told Sen. Warren G. Magnuson (D-Wash.), Appropriations chairman, that the cuts would begin July 1 unless Congress provided some help.

On the floor yesterday, New York Sens. Daniel P. Moynihan (D) and Jacob K. Javits (R) talked briefly about problems that would ensue from the cuts, but neither offered an amendment.

Magnuson said, "I do not think that this last-minute business belongs on a supplemental bill." And that ended that.

HEW intends to reduce medicaid grants by $420.8 million and Aid to Families with Dependant Children (AFDC) by $410.2 million for the last quarter of fiscal 1979 because of a congressional directive.

The directive is the Michel amendment, named for Rep. Bob Michel (R-Ill.), which last year instructed HEW to cut its spending by 1 billion in programs where waste, fraud and abuse had been found.

According to Champion's message to Magnuson, $169 million had been cut this year from college student loans by winnowing out ineligible students.

The rest of the $1 billion would come from cuts in grants for Medicaid and welfare, thus requiring each state to accept responsibility for erroneous benefit payments it has made.

HEW's decision to go ahead with cutbacks in those two programs came after a June 15 legal opinion from the Department of Justice held that Congress was entirely serious when it issued the order to cut $1 billion.

States affected by the Medicaid and welfare cuts are expected to file suit against HEW to win restoration of the funds, a prospect that doesn't seem to bother Congress in the least.

The real problem, Michel said has been HEW Secretary Joseph A. Califano's "defiant" refusal to understand that Congress intended to "hold his feet to the fire" on waste, fraud and abuse.

The secretary is on a trip to China, but an HEW spokesman said that major controls had been put in place to comply with Michel's amendment.

"Secretary Califano, I understand, has asked the Congress to bail him out of this mess by repudiating the amendment adopted last year," Michel said. "It is unfair for HEW to require the states to do something at the last minute that it was unwilling to do a few months ago."

Although HEW apparently could avoid the cuts legally by borrowing the $831 million from its fiscal 1980 appropriation, a Califano aide said the agency won't do that because it would violate the spirit of the Michel amendment.

Should the HEW cuts take effect, Congress may feel fire from another quarter - food stamp recipients who might be entitled to larger benefits.

Carol Tucker Foreman, assistant secretary of agriculture, said yesterday that the welfare cuts that, in effect, reduce recipients' incomes make them eligible for greater amounts of food stamps.

A Department of Agriculture aide estimated that the AFDC cuts would translate roughly into a need for $100 million more in food stamps.