President Reagan had decided to approve production of controversial neutron weapons but to stockpile them in the United States rather then deploying them immediately to NATO allies in Western Europe.

Deploying in 1977 that the United States planned to build a new generation of nuclear warheads for the 56-mile-range Lance missile and 22-mile-range eight-inch artillery shells caused a political uproar in Western Europe that led President Carter to defer their production.

In response to the controversy within NATO, the Carter administration emphasized that the weapons would cause less collateral damage to the West European cities than the U.S. nuclear missiles and shells that had been used in Europe for almost 20 years.

Neutron weapons, unlike traditional nuclear arms, create radiation rather than blast and heat as their main explosive power.

Reagan's decision, made last week, followed the advice of Defense Secretary Caspar W. Weinberger and reverses a 1978 decision by the Carter administration to produce the components of the weapons but not assemble or deploy them.

NATO sensitivity toward the new weapons still exists and a State Department spokesman said last night that "there are no plans at this time to deploy these enhanced radiation weapons outside U.S. territory."

Carter's initial support for neutron weapons and then his turnaround when the NATO allies would publicly support a U.S. production desicion on the weapons caused him problems within the alliance.

The episode marked a change in the minds of the Europeans, who in the past had expected the United States to make its own production decisions and look to the allies only when the time to base the weapons in their countries. Even then, the policy was never to confirm that nuclear weapons were in any country, thus preventing exactly the kinds of political protests that arose when the neutron weapons first were disclosed.

Carter's decision also became one of the defense issues on which the 1980 Reagan presidential campaign focused its attack.

The Reagan decision to go ahead with production and stockpile the weapons had been discussed within the alliance, but a state Department spokesman yesterday refused to disclose what the NATO reaction had been.

Instead, the spokesman said building the weapons "was an internal U.S. government matter," thereby drawing a sharp distinction between the approaches of the past and present administrations.

Should the further step be taken to deploy the weapons, the spokesman said, "the U.S. would consult with any ally on whose territory they would be based."

Under current planning, according to NATO sources interviewed last week in Europe, these short-range nuclear weapons will be kept within the continental United States until a crisis arises in Europe, when they would be airlifted to NATO bases.

The eight-inch howitzers that would fire neutron shells would already be in Europe, because they also can fire convential artillery shells. The Lance missle launchers also are already in Europe, armed with nuclear missles but not the neutron variety.

The Reagan neutron decision comes as the NATO allies are facing a political test over a December 1979, decison to base 572 new long-range cruise and Pershing II missiles on their territory. Many anti-nuclear groups, which opposed the neutron weapons in 1977, have focused their attention in the past year on trying to get the cruise and Pershing missile decison reversed.

The neutron production decision may cause a flurry of protest by these groups, particularly in West Germany, the Netherlands and Great Britian, where the anit-nuclear movement appears to be growing.

The Soviet Union, which was violent in its propoganda attacks on the neutron weapons on the cruise and Pershings decisons, is expected to lash out at last week's decision. But administration sources say this will not have any effect on the Reagan administration.

It is understood that the British government will support the Reagan neutron approach. However, since the short-range weapons would not be based in that country, there is some question as to how much impact London's support would have.

Perhaps more influential for the other NATO allies will be the surprising firmness in support of new nuclear programs exhibited by France's new Socialist President Francois Mitterrand.

France last week conducted a nuclear weapons test in the South Pacific and, in contrast with the secrecy employed by past French governments, publicly announced and defended the action. Mitterrand's aides have made it clear that France will pursue its own nuclear weapons program, which includes the building of neutron weapons.

Under current plans, the United States will build about 380 neutron Lance missiles and about 800 eight-inch artillery shells.

Because of the long-term planning involved, the actual production of these weapons, just beginning, following the schedule that would have been in effect had President Carter gone along with the neutron plans back in 1977.

Sen. John G. Tower (R-Tex.), chairman of the Senate Armed Services Committee, said yesterday that "the Reagan administration is doing nothing more and nothing less than required and what it has said it would do."

At Defense Secretary Weinberger's first press conference earlier this year he said that he favored production of neutron weapons, a statement that caused concern within the NATO allies because they had not been consulted.

That caused one of the first flaps between Weinberger and Secretary of State Alexander M. Haig Jr., who shortly after sent a cable to U.S. amassadors saying that Weinberger's remarks were not U.S. policy.

Last week's decision, however, was made after a National Security Council study and consultations within NATO.