U.S. policy on human rights abroad should be pursued by quiet diplomacy and "private arm-twisting" rather than public statements, Vernon Walters, President Reagan's nominee as ambassador-at-large, told the Senate Foreign Relations Committee yesterday.

Walters, a retired Army general and former deputy director of the Central Intelligence Agency, told a Senate confirmation hearing that he did not believe any country "wants to be talked down to publicly," and he criticized what he called inflammatory public statements on human rights made by Carter administration officials.

Meanwhile, the Council on Hemispheric Affairs, a Washington-based study group, charged that Walters faced a possible conflict of interest in dealing with Guatemala because of his work as a lobbyist for an oil producing consortium after his retirement from the CIA.

The council said he was retained by Basic Resources Service Inc., a Luxembourg-based consortium, to try to influence Guatemala's military government to lift oil production quotas. As part of that campaign, the council charged, Basic Resources deliberately exaggerated estimates of oil supplies, and the State Department used the same estimates unofficially "to justify the Reagan administration's support of Guatemala's brutal military dictatorship."

Walters acknowledged after the two-hour hearing that he had been retained by Basic Resources to advise on Guatemala, but said he faced no conflict of interest because in his role as foreign affairs troubleshooter he would not be dealing with oil questions in that nation.

He told committee chairman Charles H. Percy (R.Ill.) that he had been misquoted in May when he was reported as praising the Lucas Garcia government in Guatemala and denigrating the human rights issue during a tour of Latin America carried out at the president's request.

He said the Reagan administration would give as much weight to human rights as any previous government, but said countries would be told "quietly" that they might not get what they wanted from the United States unless they improved their record on human rights.

Walters also told Percy that he believed it as possible for the United States to develop closer links with Taiwan while maintaining good relations with China.

The committee is expected to vote on the nomination today, and Percy, who praised Walters' record of service in the Army and the CIA, said he hoped for Senate confirmation within a week.