The Reagan administration has decided to propose a relaxation of air pollution regualtioins to make it easy for oil, refiners, steel producers and other basic industries to expand and modernize their plants, Vice President Bush announced today.

Bush's office said the proposed change in Environmental Protection Agency regualtions would permit refiners in California to process more than a quarter million addition barrels a day of California oil in place of the imported oil now being processed.

The California refining industry reportedly asked the administration to consider the change, although it would also benefit a wide range of industries.

Under the porposed policy, an industrial plant would not have to meet current pollution control requirements on a new furnace, mill or other installation if the pollution from the new installation were balanced by reduced by emissions elsewhere in the same plant.

These kinds of pollution trade-offs are permitted now in areas where federal air quality standards are being met. The new policy would permit such trade-offs in areas that do not meet air quality standards.

In its formal notice Monday, EPA also will propose dropping its current requirement that substaintial rebuilding of any exsisting plant in an area that does not meet air quality standards must be redone with a federal permit and must comply with EPA requirements even if the plant's total pollution emissions do no increase significantly.

The proposed rules cannot take effect until later this year, after a period for public comment and review by the agency, officials said.

Bush announced the decision in his role as chairman of President Reagan's Task Force on Regulatory Relief, which is seeking major changes in environmental, health and safety rules that affect business.

The policy is an extension of the Carter administration's so-called "bubble policy," designed to give companies considerable flexibility in meeting pollution regulations but not widely used.

If effect, the policy assumes that an entire plant is covered by an imaginary bubble, and a company can modernize installations under the bubble as long as the overall plant emissions decline or remain the same.

Although details of the new policy were not announced yesterday, the objective is to make it easier for companies to use the "bubble" approach by reducing procedural and record-keeping requirements, as well as by extending the policy from "clean" areas to "dirty" areas where air quality standards are not being met.

Environmentalists complained, however, that the new policy will cripple EPA's longstanding strategy for improving air quality in "dirty" areas.

The agency has required companies that want to build a major new installation or modify an existing one to install the best available pollution control devices. In that way, an industry modernizes and expands, overall air pollution would gradually decline.

Industry spokesmen have attacked that approach, saying it has held back modernization of industry and is biased against new facilities.