In her strongest attack on unions since becoming prime minister, Margaret Thatcher today blamed them for Britain's economic decline. She urged their members to support her Conservative government's efforts to curb union power, discourage strikes, hold down wage claims and increase worker productivity.

Labor conflict in Britain today "is not so much between unions and employers as between unions and the nation," Thatcher said in a nationally televised speech from the Conservative Party's annual convention at this seaside city.

Referring to Britain's past economic success, she said, "We didn't become the workshop of the world by being the nation with the most strikes."

her attacks on union power and prescription for change dominated her wideranging preview of the Conservative government's plans for the coming legislative year and drew the loudest applause from enthusiastic party delegates filling the convention hall.

She was launching an attempted pre-emptive strike for what is expected to be a winter of conflict with union leaders who have vowed to fight her efforts to limit their power and austerity policies they say threaten their members' wages and jobs. Union leaders also accuse Thatcher of creating unnecessary conflict and seeking to deprive them of their traditional rights.

Union leaders have said they are ready to strike for large raises to cover Britain's high inflation rate and for shorter work hours to create more jobs. Recently, more than a million engineering workers staged a successful six-week strike for a 20 percent pay increase and an eventual reduction in their work week to 39 hours.

"What madness it is, that winter after winter we have the great set-piece battles in which the powerful unions do so much damage to the industries on which their members' living depends," Thatcher said. "The key to prosperity lies not in higher pay but in higher output.

"We hanker after a West German standard of living, but we fail to recognize that you cannot have a West German standard of living with a British standard of output. The truth is very simple: West German pay plus British output per man equals inflation."

In the past, she said, British governments simply printed more money to finance pay increases that were not justified by increased productivity.

"It has been happening for years," she said. "The result has been the most uncompetitive industry, the lowest economic growth rate and the highest rate of inflation in the industrialized world."

This winter, she vowed, "we will not -- repeat not -- print money to finance excessive pay settlements."

She also reiterated her government's determination to outlaw secondary picketing in strikes, make it more difficult for unions to create and enforce union shops, and encourage the use of secret ballots for important union decisions.

"Millions of British workers go in fear of union power," she declared. "The demand for this government to make changes is coming from the very people who experience this fear. It is coming from the trade unionists themselves. They want to escape from the rule of the militants."

She also argued that union members and their families, along with the rest of the nation, suffered from strikes. She said the recent engineering workers' strike had cost British industry $2 billion in sales lost to competitors in other countries.

She asked "every man and woman who is called on in the next few months to take part in disruptive industrial action to consider the consequences for themselves, their children and their fellow countrymen."

Her appeal to disregard "militant" union leaders came not only in the wake of the national engineering workers' strike, but also during well-publicized negotiations in labor disputes that have kept the Times newspapers from publishing for nearly a year and kept Britain's commercial television network off the air for more than two months. It was recently reported that strikes and management lockouts, as in the case of the Times, already have consumed more working days in 1979 than any year in the last five.

Management and the British press also have blamed frequent auto industry labor disputes for the failure of Britain's giant government-owned automaker, British Leyland, to take advantage of massive infusions of government financial aid.

British Leyland's board has threatened to liquidate the company, including the jobs of the vast majority of its 165,000 employes, if union leaders do not agree to a last-ditch streamlining plan.

Under the plan, British Leyland would shut down 13 factories, eliminate 25,000 jobs by paying nearly $10,000 to each worker who agrees to leave, and drop relatively small production models like the MG, a favorite with Americans, to concentrate on family cars for the British domestic market in partnership with the Japanese auto maker, Honda.

Thatcher said today that Britons must endure a period of austerity and must work hard to increase productivity if her government's efforts to revive the economy eventually are to succeed.