U.N. Ambassador Andrew Young, one of President Carter's most controversial and politically important supporters, resigned under fire yesterday, insisting that he had done nothing wrong.

At a press conference announcing his resignation, Young portrayed the decision as his alone, taken on his own responsibility to spare Carter from future embarrassment because the ambassador is unwilling to curb his freewheeling ways.

Other sources suggested Young had much less choice than that, following the revelation of his meeting with a representative of the Palestine Liberation Organization in violation of U.S. policy, and the disclosure that he had given an untrue account of the circumstances to the State Department.

Secretary of State Cyrus R. Vance, who summoned Young to a meeting here yesterday morning, was reported to have been quite upset over the diplomatic damage and, according to some accounts, determined that Young not continue in his post. Because of the political sensitivity of his position as Carter's most prominent black supporter, however, the decision was uniquely one for the president and his ambassador.

White House press secretary Jody Powell, in an uncharacteristic display of emotion, choked back sobs while reading Carter's letter accepting Young's resignation "with deep regret." Carter said Young "earned the gratitude of all Americans with your superb performance." Vance issued a statement praising Young but without an expression of regret.

Early reaction from black political leaders was of strong support for Young. The resigning ambassador declared that he will actively campaign for Carter's reelection, and there was no hint of criticism of the president in his statements. Thus the political consequences, while certain to be large, were difficult to chart or measure.

Declaring himself to be "not at all bloody" and "in a way . . . unbowed," Young presented his resignation to reporters at the State Department as the result of a battle between sterile diplomatic protocol and the good of the country.

"I really don't feel a bit sorry for a thing I have done. I could not say to anybody that, given the same situation, I wouldn't do it again almost exactly the same way," he declared.

The difference between this and his many earlier scrapes with administration policy, according to Young, was "the time of the year" -- the approaching campaign season in which continued furor over his words and deeds might jeopardize Carter's reelection chances. Young said he could have remained at his post "if I could promise I wouldn't continue creating incidents." He said he could not promise to change his ways.

A White House official suggested that the crucial difference this time was that "he lied to his own government." In an administration for which refusal to lie has become a cornerstone of policy, Young's actions were a grave matter on almost every score.

The peril for the administration was dramatized when Senate Majority Leader Robert C. Byrd (D-W. Va.) and Republican presidential candidates Bob Dole and George Bush publicly called for Young's resignation. The Byrd announcement, particularly, made it difficult if not impossible for Young to remain.

Arab diplomats at the United Nations said the big difference from previous occasions was that Young had tangled with Israel rather than a nation or group less potent in American politics. The PLO, in a statement issued at its Beirut headquarters, charged Young was pushed out of his job "because he believed in the just cause of the Palestinian people."

In contrast to Powell, the resigning U.N. ambassador seemed at times selfassured, almost serene, in his farewell press conference. With arms outstretched and other gestures more familiar to the pulpit than the diplomatic podium, Young said he was "extremely impatient with the slow, plodding way of doing things" because he came from the ranks of an oppressed people and continues to identify with "the least of these my brethren."

Young continued to insist, as he had 24 hours previously in talks with U.N. reporters, that "I did not lie . . . I didn't tell all of the truth" in his report to the State Department on his meeting with the PLO's U.N. observer, Zehdi Labib Terzi.

Young said he had prefaced his misleading statement on the matter to an assistant secretary of state last Saturday with the words, "I am going to give you an official version." He suggested that the "official version" was intended to serve the requirements of diplomacy, specifically the U.S. commitment to Israel not to recognize or negotiate with the PLO under present conditions.

Young said he disagrees with the policy against dealing with the PLO, which was established by then-Secretary of State Henry A. Kissinger in 1975 and reaffirmed by Carter as recently as last weekend. Young said the policy originated "at a time when we all thought the PLO would go away," but was continued in a period when the organization, now politically stronger, cannot be ignored.

In his letter of resignation to Carter, Young said it is "extremely embarrassing that my actions, however well-intentioned, may have hampered the peace process" in the Middle East. That was as close as he came to a confession of error.

Even as Young was deciding his future in a day of meetings with Vance, Carter and other officials, the State Department reported Milton A. Wolf, U.S. ambassador to Austria, had two inadvertent "chance encounters" and one business meeting with a PLO official in recent weeks.

All three contacts were with Isa Sartawi, said State Department spokesman Thomas Reston, responding to an article in Tuesday's Jerusalem Post. The two encounters were of a purely social nature, Reston said. At the other meeting, which was at Sartawi's initiative to explain some matters of PLO policy, the ambassador made no substantive comments but read a statement of the U.S. policy against negotiations with the PLO, according to Reston.

Reston said the State Department did not authorize or encourage Wolf's meetings, and that the ambassador has been "reminded" of the U.S. policy rather than rebuked.

Terzi, the PLO official whose meeting with Young brought the U.N. ambassador's downfall, told reporters in New York that the resignation represented "Zionist backmail."

Israel's U.N. ambassador, Yehuda Blum, who had questioned Young's first account of the PLO meeting and who later received a frank admission of the facts from Young, said he was "saddened" by the resignation. "This is no way detracts from the gravity of his act, which deviates from solemn assurances given to Israel that the U.S. government would have no dealings whatsoever with the PLO."

Thomas E. Offenburger, Young's press secretary at the United Nations, said he had been told by Newsweek last weekend that the information which prompted the magazine's inquiry -- the first notice to the State Department of Young's PLO meeting -- originated in Israel from Israeli sources.

Young said yesterday that he decided to take matters into his own hands, despite the U.S. policy against meeting with the PLO, because he was caught between two groups, which were both quite desperate -- the Palestinians "desperate for recognition" and the Israelis "desperate for security."

Young portrayed his meeting with Terzi as essential to persuading the Arabs to postpone a Security Council debate on the knotty Palestinian issue. He said he had told the ambassadors of Kuwait, Syria and Lebanon that he could not meet with a PLO representative, but at the same time hinted that one of them could invite of PLO official to his home and that Young would not refuse to come.

The Kuwaiti ambassador, Abdala Yoccoub Bishara, invited Terzi to his home July 26 and the meeting with Young ensued.