The Army yesterday defended its new M1 tank as the "best tank in the world," but, in testimony before a Senate Armed Services subcommittee on tactical warfare, admitted that the controversial M1 is not "flawless."

Sen. Barry Goldwater (R-Ariz.), chairman of the subcommittee, called the hearing to give the Army a chance to defend itself against what he termed "irresponsible statements" in the press on M1 costs, which the Army now puts at $2.7 million per tank, and its performance.

Undersecretary of the Army James R. Ambrose set the tone of the session by saying that "contrary to what we have read in the newspapers, the cost controls have been excellent" on the M1 project. He added that changes to "cure problems and handle program improvements" have added only 15 percent to the M1's cost.

"These changes," he said, "were quite modest compared to the general run of Defense Department programs."

Ambrose and Gen. Glenn K. Otis, head of the Army's training and doctrine command, conceded that some production and operational problems remain. But, as Otis put it, the M1 "meets or exceeds the key requirements to survive and win on the battlefield."

To illustrate that point, Otis said that the M1 can travel 350 miles before suffering a serious malfunction that would eliminate it as a weapon capable of fighting. The Army's original requirement for what became the M1 was that it be able to travel 320 miles between such breakdowns.

Testimony focused on one of the main problems to date with the M1: its power transmission has not met the Army's standard, which was that half the tanks be able to go 4,000 miles without a major breakdown. Of roughly 40 M1s tested last year, only 37 percent achieved the 4,000-mile goal.

Walton H. Sheley Jr., director of the General Accounting Office group monitoring the M1, told the subcommittee that he believed production should be limited "until the power train could be improved . . . . " But Otis said the Army believes the power-train problem has been solved.

The Army's proposed new armored combat earthmover (ACE) also was brought up at the hearing.

Last year the Army asked for and got from Congress $40.4 million to purchase the first 36 ACEs, speedy bulldozers said to be needed because they could keep up with the fast M1, and because the M1 could not dig itself into position when it arrived in battle.

Embarrassed about stories that the powerful M1 could not dig itself in, Army officials have since said that, as with earlier tanks, one M1 in each company would be equipped with an earthmoving blade.

Last week an Army spokesman said that the Israelis were to demonstrate in August a blade that could be used by the M1.

Yesterday Otis told a different story. He said that a blade for the M1 "is under fabrication now . . . ," and Army officials later said a Chicago company called Barnes-Remecki was doing the job.

Contacted yesterday by telephone, Victor Wasynczuk of Barnes-Remecki said his firm had received a contract from the Army on Nov. 24 to develop and build a blade for the M1.

In a related move, Sen. David H. Pryor (D-Ark.) on Thursday introduced a bill to rescind the $40 million appropriated last year for the ACE.

"What I fear the most," Pryor said, "is that . . . complexity leads to greater complexity. We have a fast tank, so we have to have a hot-rod bulldozer, no matter the cost."

At yesterday's hearing, Army witnesses said only a few of the ACEs would be needed by M1 battalions, that most would be doing the work now performed by the slower and much less expensive D7 bulldozer.