The Reagan administration is preparing legislation to drop a longstanding requirement that federally funded classes for children who aren't proficient in English must use only bilingual instruction methods.

Gary L. Jones, deputy undersecretary of education for policy and budget, said the proposals aren't complete, but that they also would sharply reduce the number of children who would be eligible for the federal program.

The plans are in line with Education Secretary Terrel H. Bell's policy of giving schools more flexibility in teaching children who have trouble with English. The plans are sure to be opposed by the Hispanic community, an increasingly powerful political force in states such as California, Texas, New York and Florida.

A controversial study released by the department last fall fortified Bell's position by saying there was little evidence that the bilingual approach worked. Bilingual advocates have countered with a study that criticized the department's research.

Internal memos made available to The Washington Post show that the department's lawyers concluded that a legislative change is necessary because the law requires bilingual instruction and precludes using programs in which English is the only language spoken.

One memo said that 1978 amendments to the bilingual act reflected a growing congressional concern that the program be used to help children become proficient in English, not to "promote a bilingual society."

The department has estimated that 3.6 million children are eligible for the enhanced language training. But at its high point, in fiscal 1980, the federal bilingual program served only about 324,000 children. For fiscal 1983, the Reagan administration budget requests $72 million for an estimated 125,000 children.

In a Jan. 12 "draft decision memo" to top officials, department planner Emerson J. Elliott noted that one option being studied would reduce the target population from 3.6 million to 1 million. Jones said he couldn't vouch for the numbers now because some changes have been made.

Arnold Torres, executive director of the League of United Latin American Citizens, said the changes the administration are considering cannot be justified. "They have acted in a vacuum," he said of department officials. "They seem to have an obsession with being anti-bilingual . . . . It's politically narrow-minded, and they have not carefully considered the impact of the changes on kids who need the help."

Torres cited a study by researchers at California State University at Sacramento that criticized the department's study last fall that said bilingual programs had failed, while immersing students in English would work.

"That the experimental case has not been adequately made for TBE transitional bilingual education is poor reason to recommend that another, untried approach is preferable, much less to insist . . . that it is the only effective approach," the new study said.

The authors of the California study said the department's study "is a panicky retreat" from the gains that have been made.

The California study acknowledges that "TBE is no panacea. In reality, it is little more than an educational placebo, giving the impression of a powerful medicine, though helping very little . . . . We do not advocate it or defend it because it is so good, but because it is better than anything we now have."