The Reagan administration's latest welfare proposal didn't go over too well yesterday with Annie Mae Johnson, who lives in the Kenilworth Courts housing project in Northeast Washington.

"It's ridiculous," said Johnson, a short, slim woman who sat in a soft, cushioned chair in her living room -- a portable television set on the coffee table, a box fan stirring the air and, near the stairway, two aquariums that she said were gifts from a friend.

The new proposal would limit assets and personal belongings of welfare families to $1,000 per household instead of the $2,000 previously allowed -- a limitation that many welfare recipients and officials said yesterday was rarely monitored.

Johnson said she realizes that some things she has in her home, such as the television set, the radio, and the bicycles for her five children, the aquariums and maybe even the fan might be considered entertainment or conveniences. "But they are essential," she said. "You need entertainment. Why should I deprive my family of them?"

The proposal by Health and Human Services Secretary Richard S. Schweiker caught local officials by surprise. A car, equity in a house, unspecified household goods and clothing would be exempted, HHS spokesman Laura Genero said. But it will be up to each state to determine what other items -- from jewelry to microwave ovens -- are "essential to day-to-day living," she said.

The new proposal, which could take effect Oct. 1, could create a dilemma for some of the thousands of welfare families in the Washington area, depending on how such "essentials" are defined and how tightly the new regulations are enforced.

Beverly Diggs, 29, who lives in a public housing project in Alexandria, said she was surprised to hear that her personal belongings, some of which were gifts from members of her family, might be in jeopardy.

"If Reagan would come through here, he might not take me off AFDC," she said. "This is not luxury -- it's barely livable. I'm living from check to check."

Diggs, who was laid off from her personnel job at National Airport a few weeks ago but has not yet found a new job, has turned to welfare to support her two school-aged children.

A noisy window air conditioner was blowing cool air into the dimly lit living room. The long green couch and thick upholstered chair behind the wooden coffee table are protected by plastic slip covers. The wide screen RCA television is wired for several cable stations, and the bookcase across the carpeted floor holds a modern-looking turntable, receiver and twin speakers -- all belongings that could be counted among her assets, depending on how Virginia officials interpret the new regulations.

"President Reagan is making it harder for us to get off welfare," she said. "Someone shouldn't be able to take away what I already have. I'm not going to go and sell all my stuff just to stay on welfare. He can't just come into someone's home and say this has got to go. Some of this was given to me by people in my family to help me live more comfortably."

She held up a package of white draperies, still in their plastic wrapper, which she said her parents had just given her as a present. "How do you know how much this is worth?" she asked. "Is Reagan going to send in an appraiser? He's going to have to hire more people to check up on us."

Diggs receives $310 from AFDC each month for herself, 9-year-old Lloyd and Stacy, 6. She opened the closet door and took out five brightly colored children's shirts and three pairs of pants on new hangers.

"This is what I did with my AFDC check," Diggs said. "I'll worry about the rent later. I always deal with my children first. I don't throw my money away. I do without."

Loretta Young, who lives around the corner from Johnson in Kenilworth Courts, said she receives $140 a month under the AFDC program to supplement the money she earns cleaning rooms at the Sheraton-Washington Hotel.

"One thousand dollars," she said shaking her head. "That's not enough to include all your personal needs."

"I got four girls, 10 to 15 years old," Young said over music from a wall stereo. "They are getting more and more expensive.

"He's been kind of born with a silver spoon in his mouth," she said of Reagan. "He doesn't understand how poor people live."

Some welfare recipients said the new proposed rules reminded them of days when those on public assistance were not permitted to have televisions, radios, telephones and other amenities.

Meanwhile local officials said the proposed standards could be very difficult and expensive to enforce.

"I think the proposal is pretty stringent," said Robert Osborn, an official at the Virginia Department of Welfare. "These people don't have much, anyway. Where do you draw the line? Household goods, clothing -- what do you exempt? How do you calculate how much a couch is worth?"

Luther Starnes, assistant to Maryland's secretary of human resources, said, "If a family of four, which is getting $326 a month, the maximum in Maryland, can somehow save a dollar or two and buy something, do you penalize them for their frugality? Or do you encourage more fraud than exists now?"

"One of the problems is the regulations are still in draft form," said James D. Butts, deputy commissioner of Social Services Administration in the D.C. Department of Human Services. "We don't know how we are going to define personal assets. The definition hasn't been provided."

For example, Butts said, "How much weight do you give to a three-year-old television set?"