After weeks of shying from the fray, the Carter administration is steeling itself for a tough Senate fight over land, water, money and politics in the West.

Interior Secretary Cecil D. Andrus said in an interview that a floor fight is inevitable because of the Energy and Natural Resources Committee's "unacceptable" revision of the Reclamation Act of 1902.

Two weeks ago the committee wrote a bill that, in effect, legitimized huge federal water subsidies on thousands of acres of reclamation land in 17 western states - a situation declared illegal under the 1902 law by a federal court.

"If the American public really knew who they are subsidizing, this would be a major issue with them - a red hot issue if they knew who is receiving the financial benefits," Andrus said.

Basically, the bill increases the acreage limit from the present 160 acres per person to 1,280 per family, repeals a requirement that farmers live on the land the farm, allows big operators to lease unlimited amounts of irrigated land from others and exempts the owners of some 622,000 acres in projects in California's Imperial and San Joaquin valleys from acreage limits.

"There are so many things wrong with this, we have to have a new bill," said George Ballis, director of National Land for People, a California organization seeking to break up the big subsidized empires.

"This bill has the effect of legalizing all the scandals that we and others have uncovered over the last 15 years - exempting some of the biggest land-owner in the world, such as J. G. Boswell, Standard Oil of California and others," he said.

The reclamation bill was cranked through the Senate committee at the direction of Sen. Frank Church, the Idaho Democrat who faces a reelection campaign next year in a state where federal irrigation is vital to the farm economy.

Andrus, a former Idaho governor, denied in the interview that his long political relationship with Church was a factor in Interior's watching passively as the committee adopted provisions the secretary opposed strongly.

"The chairman [Church] knew my views - I said two days before the markup that we must have residency requirements and leasing limitations," Andrus said, "but that committee ran away with itself. They went further than I anticipated they would . . . They've repealed the old act and the person who took it in the neck was the taxpayers."

"I think those well-heeled lobby groups have fouled their own nest. They may be gleeful today, but we will have Senate floor amendments and the House will then have its own bill, because this version doesn't stand a prayer there. If there is a stalemate, I'll be out there, bound by a court order, to enforce the 1902 law," Andrus said.

This is how the situation is shaping up:

The administration, although caught by surprise by the committee's bill, will have Senate floor amendments, aiming particularly at lease limitations and opening excess lands to aspiring farmers.

Sen. Gaylord Nelson (D-Wis.), longtime critic of existing reclamation practices, intends to take the lead in attempting to amend the bill when it hits the floor later this summer.

The prospects for House acceptance of anything resembling the Senate Committee bill seem uncertain. Rep. George Miller (D-Calif.), and influential member of the Interior Committee that will deal with the legislation, has vowed a strong fight.

Miller called the Senate committee rewrite "an ill-disguised but outright repeal of the reclamation act" that could cost the public "billions in tax dollars." He termed the bill "the biggest western stagecoach robbery of the public since Jesse James . . . Socialism for the rich."

But for now, the forum is the Senate, where the coalition of western legislators who supported the rewrite and their wealthy agribusiness allies are moderately confident of prevailing.

Gordon Nelson, a lobbyist for Farm/Water, a wealthy alliance of farm-banking-agribusiness interests from the West, said his group is "quite happy" with the bill.

"If we can maintain a strong western front," he said, "there is a good chance we can get this bill through the Senate."

He thinks the Carter administration's interest in winning presidential votes in the West next year runs so high that it must compromise on the reclamation issue.

The subsidy that Andrus and others talk about is the federal payment for reclamation projects from which the large landowners get their water at bargain-basement rates.

Some 146,000 farmers use 11 million acres of Interior Department reclamation lands in the West, in many cases paying for their water at such low rates that it would take centuries to repay the government.

A recent study by the American Journal of Agricultural Economics reported that the average subsidy to a farm of 1,760 acres would be about $850,000 over the life of a reclamation project.

In the highly productive Westlands water district in California, the study found that a farm of 1,760 acres will receive a $3.8 million tax subsidy over the 50-year life of the project - that is, about $284,000 a year.

Such subsidies on farmlands operated by powerful families and corporation - particularly in California - give them a competitive advantage over farmers without federally supplied water.

The idea behind the 1902 reclamation law, which set a 160-acre limit on the amount of federally irrigated land one person could hold, was to promote small farms and to settle the West.

With federally financed water, which the users eventually would pay for, the arid western lands could bloom - and have in most instances - to produce an agricultural bonanza.

But Interior only fitfully enforced the law and, as a result, companies and families put together huge tracts of reclamation land that far exceeded the 160-acre limit. Great fortunes were built. With only so many acres available, small farmers gradually were prevented from getting into the reclamation districts.

One such group of aspiring farmers, Ballis' National Land for People, brought suit in federal court, charging that Interior had failed to enforce the 1902 act. The court held in their behalf, ordering Andrus to draw up new regulations that would include procedures for moving "excess" holdings into new hands. An alternative, the court said, would be for Congress to revise the law.

That led to the current rush to congressional action. Unless the 1902 act is revised, Andrus must produce the regulations that will enforce it much more stringently.

And strict enforcement, of course, would mean breaking up huge tracts exceeding the 160-acre limit and putting them up for sale to aspiring farmers.

Typical of the big combines that would suffer is the J. G. Boswell Co., based in California, which has some 140,000 acres in its control in California and Arizona, making it the country's largest cotton producer.

The company's interests are promoted in part by an active political action committee, which in the past two years has distributed thousands of dollars to House and Senate candidates - almost all Republicans.

Its contributions, according to records at the Federal Election Commission, included $1,000 to Sen. James McClure (R-Idaho), $1,500 to Sen. Pate Domenici (R-N.M.) and $1,000 to Sen. Ted Stevens (R-Alaska) - all members of the Energy and Natural Resources Committee.

Other big Boswell contributions included $10,000 to the Republican Senate campaign committee, $2,000 to Democratic Rep. Jim Wright's Majority Congress committee, plus $1,000 contributions to each of 15 other Senate candidates, including Minority Leader Howard H. Baker (R-Tenn.).

Political campaign contributions may or may not influence a legislator's vote, but the Boswell operations came out splendidly in the Senate bill - the bulk of their California land was exempted from the acreage limitation.

"These people - there big corporate farmers are farming the government," said David Weiman, a Weshington consultant who is lobbying for small-farm groups.

Andrus noted the effort of some of the large irrigation water users, principally California Republicans, to get a foot into Democratic doors with campaign contributions.

"I've been to Democratic National Committee fund-raisers and I see these same faces. They're well-heeled and willing to put their money into campaigns and I suppose they've acquired a little influence," Andrus said.

"They are looking out for No. 1, but that doesn't mean they should prevail . . . I don't intend to try to solve this on a political basis, but rather on a what's-right basis."