The congressional battle of the budget raged anew yesterday in a clash between two powerful Senate committee chairmen over spending priorities and insitutional turf.

"The most horrendous, most shocking conduct I've ever seen," protested Senate Budget Committee Chairman Ernest F. Hollings (D-S.C.)

"Fuss and feathers," said Senate Appropiations Committee Chairman Warren G. Magnuson (D-Was.), at the meeting of the appropriations panel of which Hollings is also a member.

At issue were tentative allocations to the 13 appropriations subcommittees of $375.5 billion from the $613.6 billion budget plan the Congress approved earlier this year for fiscal 1981 -- a process designed to assure that Congress doesn't pierce its budget ceiling.

What enraged Hollings was a staff-drafted Appropriations Committee allocation plan that envisioned giving $4 billion less to defense than the Budget Committee fought long and hard all spring to lock into the budget. The plan shifted the $4 billion to the Labor, Health and Human Resources subcommittee that oversees spending for education.

The $4 billion had been included for defense spending by the Budget Committee to cover costs of an 11.7 percent military pay increase and for bigger benefits for military personnel.

Hollings had led the crusade for higher defense spending along with offsetting cuts in social programs, devoting weeks to fending off challenges from domestic spending advocates who were seeking a fraction of the money that now appeared to be slipping between his fingers.

"This is my budget," he protested at one point.

Appropriations Committee aides said money to cover costs of additional military compenssation could be added at a later time. However, Budget Committee aides said this would only add to the already mushrooming deficit for fiscal 1981 -- which Hollings is also determined to try to prevent.

In addition. Hollings contended yesterday that the Appropriations Committee plan includes a $20 billion "wish list" of spending items and ignores spending cuts that the Senate has already approved, thereby threatening to add even more to the deficit.

"To adopt the draft allocation will shortchange defense requirements, break the military pay commitments the Senate has already made, lead to a much higher deficit, and constitute sheer political deception about the spending [that] this allocation actually involves," said Hollings and Sen. Henry Bellman (R-Okla.), ranking minority member of the Budget Committee, in a letter circulated yesterday among members of the Appropriations Committee.

Together with Bellman, Hollings won a reprieve from the Appropriations Committee when it took up the matter Friday. Yesterday's meeting was intended to resolve the dispute. But it, too ended inconclusively.

Making Hollings even angrier yesterday was a "deck of telegrams skyhigh" that rolled in over the weekend, implying, he said, that he was out to cut education spending -- an allegation he vigorously denied. Nor was he soothed by a throng of students who were in town for an American Students Association conference and wound up filling the corridors outside the committee room, some wearing "Play Hardball for Higher Education" buttons.

As yesterday's session opened, Magnuson sought to defuse the dispute, saying the allocations were merely advisory, subject to the overall spending ceiling that Congress sets for itself. "I don't know what all this fuss and feathers is about [for] an advisory report," complained Magnuson.

But he also chided the Budget Committee for postponing until Aug. 18 or later any action on a second budget resolution that sets binding spending limits for 1981. Faced with such a delay, Magnuson said the Appropriations Committee had to move ahead swiftly to meet its target of finishing money bills by the start of the new fiscal year Oct. 1.

As Hollings continued flaying the plan prepared by Magnuson's staff, Magnuson, too, appeared angry. "I just resent your saying we're trying to pad the allocations," he said.

And, as for Hollings' assertion that the Appropriations Committee was juggling figures, Magnuson said: "Everyone juggles figures. . . . The Budget Committee juggles all the figures it can get ahold of."

Moreover, Magnuson said, the Senate Appropriations Committee was following allocations approved earlier by the House Appropriations Committee. That did not mollify Hollings, either. They pulled "the same trick" on the House side, he protested.