The president of the American Bar Association yesterday denounced the Reagan administration's decision to eliminate federal funding of legal services for the poor, and indicated that the ABA will lobby vigorously in Congress to reverse the president and keep the program alive.

ABA President William Reece Smith Jr. said the Reagan decision was "unsound, unwise and not in the nation's best interest. Eliminating this important program, commited to assuring access to justice for the nation's poor, will in the long run cost our society far more than any immediate dollars we may save," Smith said.

An ABA spokesman also said the organization, which represents about 250,000 laywers, will launch a vigorous campaign to defeat the proposed cuts. Joining it will be numerous Democratic members of Congress and scores of organizations representing lawyers and poor people, some of whom also made their views known yesterday.

"President Reagan's proposal . . . is a repudiation of the nation's commitment to equal justice under law," said Howard Eisenberg, executive director of the National Legal Aid and Defender Association. It is "a repudiation by the Reagan administration of a fundamental principal of our democracy," said a statement from the National Organization of Legal Services Workers, "that rich and poor stand equal before the law."

The Office of Management and Budget confirmed Thursday that the administration will seek "zero funding" from Congress for legal services. It will seek outright elimination of the Legal Services Corporation, which dispenses more than $300 million a year to legal aid programs around the country and will not, as originally planned, dedicate any money for states to fund their own legal services activities.

Legal services have been a favorite target of conservatives, including Ronald Reagan, since Lyndon B. Johnson's Great Society first started financing them 15 years ago.

The impact on the legal system of the program's elimination, many believe, would be substantial.Because states are often the targets of legal aid suits, governors are not expected to look favorably on well-funded state legal aid programs. The private bar in some states has already established systems of pro bono representation for people who cannot afford lawyers, but such systems are thought incapable of picking up more than a fraction of the caseload handled by the 5,000 legal services lawyers around the country.

"Without this program," Senate minority leader Alan Cranston (D-Calif.) said yesterday, "the poor people in this country would be deprived of access to our system of justice. . . . It is a very vital part of the American system of justice."