Sen. Birch Bayh (D-Ind.), chairman of the subcommittee investigating Billy Carter's Libyan dealings, said yesterday that he will recommend changes in the Foreign Agents Registration Act, perhaps to prohibit former Cabinet officials, former members of Congress or family members of sitting presidents from acting as foreign agents.

"I don't want to violate the constitutional rights of family members or other citizens, but we have to consider not only impropriety", he said. "what does the average citizen percive if a former Cabinet member is representing a foreign country?"

Bayh's suggestion came at the end of the panel's second day of hearings, during which Justice Department and General Accounting Office oficials detailed widespread evasion and resistance to the registration law on the part of attorneys, lobbyists and others who are acting as foreign agents.

The case of Billy Carter, who resisted registering as an agent for Libya until the Justice Department filed a civil suit last month, is by no means unique.

"A good many law firms are adamant about not registering," Robert L. Keuch, associate deputy attorney general, told the subcommittee. "Only at the door of the courthouse is voluntary compliance obtained."

Keuch said it is not unusual to negotiate for months and even as long as a year to get foreign agents to register. He added that criminal prosecutions are almost never brought under the law because it is so difficult to prove "willful" violation "beyond a reasonable doubt," as the act requires.

In response to a questions from Bayh, Keuch said several well-known former oficials have registered as foreign agents, including J. W. Fulbright, former chairman of the Senate Foreign Relations Committee, and two former CIA directors, William E. Colby and Richard Helms. Keuch agreed to provide the committee with a full list of prominent former government officials who have registered under the act.

"We should consider the self-enrichment aspect," Bayh said. "Whether a person who has served as a Cabinet officer or congressman . . . should use that experience for a foreign government."

Bayh also asked the Justice Department for recommendations on how to strengthen the act. "I'm rather frustrated at the inability of this legislation to give a complete picture of who influences our policy with respect to foreign nations," he said.

Because of "improperly claimed exemptions," "general unawareness of the act's requirements" among federal agencies and "evasion of the act," GAO official J. Kenneth Fasick testified, the 650 agents (and their 6,200 enployes) may be "only the tip of the iceberg."

In a report conveyed to Attorney General Benjamin R. Civiletti last week, the GAO, an investigative arm of Congress, found that because agencies such as the State Department, the Securities and Exchange Commission and the Defense Department do not keep records of lobbying contacts, the government has no way of knowing how many foreign agents are unregistered.

In four fair trade cases reviewed at the International Trade Commission, however, GAO investigators found that, according to Justice Department criteria, 20 witnesses should have been registered. Only one was.

The act allows exemptions for commercial activities. "so if an American citizen sells so many bananas for a foreign government and gets a nickel a case, we don't require registration," Bayh said. "that's a sizable loophole."

The act also has an exemption for lawyers who represent a foreign country in court or before a government agency, an exemption which has been broadly interpreted by many law firms.

GAO investigators reviewed registration statements for 163 agents this year only 51 percent adequately reported their activities. Of 46 lawyer-lobbist statements, two thirds were incomplete. Tourist bureaus and public relations firms were more conscientious in providing information, the GOAfound.

Since 1972, the Justice Department has filed civil suits against such outfits as the Irish Northern Aid Committee, the Covington and Burling law firm, the United States-Japan Trade Council Inc., Lane and Mittendorf law firm and the American Chilean Council.

Since agents decide whether they are exempt from the act, without having to check with the Justice Department first, no fines are levied for failure to register. "the situation hardly motivate voluntary compliance," Fasick said.

The GAO has recommended that the attorney general seek legislative authority to require written notification of exemption claims from potential agents.

Fasick told the subcommittee the law also should be amended to give the Jusitce Department administrative subpoena powers. As it is now, government lawyers can't get documents from law firms and other lobby groups to prove they are foreign agents.

New legislation should also allow for civil fines to punish agents who register late, he said. Although registration is required within 10 days of becoming an agent, fewer than a fourth of 79 agents checked met the deadline, the GAO reported.

"There are so many holes in the law only the most conscientious and vigorous individuals would register," Sen. Claiborne Pell (D-R.I) remarked.

Sen. PATRICK J. Leahy (D-Vt.) called the act "confusing . . . filled with numerous interpretations."

GAO and Justice Department officials said enforcement of the act is hampered by lack of funding -- only seven attorneys are assigned to the foreign registration unit. The lawyers are mostly preoccupied with complex court and grand jury proceedings involving extensive bank, hotel and telephone records, and thus have virtually no time to inspect the records of already registered agents, the witnesses said.

Further problems have arisen as a result of a fight between the State and Justice departments over who should be required to register. In 1975 "vvarious individauls [at the State Department] stymied the [Justice Department] unit's attempt to locate 13 individuals who arrived form [Turkey] to lobby for a resumption of arms shipments," Keuch said.

State and Justice officials have yet to agree on guidelines for registration, Fasick said.

Such issues will be examined in more deptph once the subcommittee hires a chief councel. Former Watergate special prosecutor James Neal met yesterday with subcommittee senators and was offered the job. He is expected to respond by today.