Interior Secretary James Watt yesterday announced he will abolish the office where he once worked, the old Bureau of Outdoor Recreation, which is now known as the Heritage Conservation and Recreation Service.

In an outline of what he called "deep cuts and funding shifts" at Interior, Watt declared a moratorium on further federal land purchases and eliminated three major park purchase grant programs to the states. Most of the Heritage programs will be transferred to the National Park Service, but "the HCRS will be terminated as a separate departmental entity," the outline said.

Watt told staff meetings this week the shifts would not involve any firings and that displaced persons would be relocated within the "family of Interior." But one employe described the atmosphere at the department as "mildly controlled panic. Nobody here really understands what has happened."

Although Watt's public outline was general, departmental sources said he had spelled out the various cuts and shifts to his bureau chiefs in detail as small as $100,000 items, leaving them little discretion in managing the reductions. "There was no appeal. We were allowed to make some tradeoffs but not very many," a senior project officer said.

Watt was director of the Bureau of Outdoor Recreation from July 1972 to November 1975, during which he fathered the first nationwide plan for outdoor recreation and developed a new financial management system. His resume said he was "a principal administration spokesman on recreation and conservation matters before Congress and interest groups." He left to become a member of the Federal Power Commission.

The Heritage service now aids land use planning at state and local levels and manages the Land and Water Conservation Fund in acquisition of parks and recreational land. Watt said he would seek legislation to allow him to use fund money not to purchase more land but to help restore bedraggled parks which "are not now properly protected for the peoples' use." He added the government "must learn to manage what it owns before it seeks to acquire more land."

Watt said he would begin "aggressive programs of exchanges" of federally owned land for private parcels "to round out the federal conservation estate."

Land use planning and the fund will be transferred to the National Park Service with the urban parks program, technical and restoration services and planning for the wild and scenic rivers system, the national trails system and the national register of historic places, Watt's summary continued.

Programs worth $2.6 million within Heritage will be terminated -- an interagency coordination program, urban waterfront development, clean water studies, preservation policy planning and compliance review programs, as well as the coastal zone management program.

Watt said he would redesign the abandoned programs to provide local and state governments some payment in lieu of taxes they cannot collect on federally owned land within their borders. At the old Bureau of Reclamation, now known as the Water and Power Resources Service, water projects now under construction will be continued, but new projects "will await an improved national economic situation." Some delays in current dam building will result from a proposed $35 million cut in fiscal 1982 construction funds, Watt's statement said.

In an anticipated action, Watt said he would move most regulatory activities of the Office of Surface Mining to state governments. The OSM program had been scheduled to become chiefly one of monitoring this year in any case after state plans to implement the Surface Mining Act of 1977 had been approved.