Interior Secretary James G. Watt's legal staff has come to his defense in the uproar over two private Christmas parties for which the General Accounting Office says Watt owes the U.S. Treasury $4,300.

Interior's Office of the Solicitor gave notice last week that it plans to challenge the GAO decision, which called on Watt himself to pay for a $1,921 breakfast for Cabinet wives hosted by his wife, Leilani, and for a portion of his own $6,921 cocktail party for Reagan administration officials.

Specifically, the solicitor will take issue with GAO for characterizing Mrs. Watt and other Cabinet wives as "private persons," according to Deputy Assistant Interior Secretary Richard Hite.

"We consider a Cabinet wife an extension of the secretary's office," said Hite, who claims responsibility for advising Watt that he could charge both parties to the department. That argument will be included in a "detailed summary" and "legal analysis" of the parties that Interior notified Comptroller General Charles A. Bowsher it will submit next month, asking him to reverse the GAO ruling.

The parties were held at Arlington Cemetery's historic Custis-Lee Mansion, which is managed by Interior's National Park Service. Watt billed the total $8,842 cost of the events to his official entertainment fund and to the Cooperating Association Fund of the park service, which is made up of private contributions.

The GAO said neither party served to "further official park service purposes," as required for expenditures from the private donations fund. Several contributors to the fund angrily denounced the parties as a "despicable" and "improper" use of their money.

GAO said Watt could charge his own cocktail party to Interior's official entertainment fund since it was attended by administration officials. (His wife's party does not qualify, GAO said, since it was attended by "private persons.") Only $4,500 remains in the entertainment fund, though, leaving about $4,300 of bills for the two parties that GAO says "must be paid by the officials who authorized the expenditures."

While Interior officials generally agreed that Watt would foot the bill in this case, the secretary has stayed clear of the debate over the parties. At a budget hearing last week, Watt deferred to Hite on all party-related questions posed by members of the House Appropriations subcommittee on interior and insular affairs.

Hite contended that the Watts' parties did, in fact, "further the mission of the National Park Service," by putting one of its most historic mansions on display for administration officials and their spouses.

"Is the mission of the National Park Service entertainment?" asked a skeptical Rep. Sidney Yates (D-Ill.), the subcommittee's chairman.

Hite also argued that the events were "official"--not "primarily social," as GAO said.

"What makes a function official? If it's given by an official?" Yates asked.

"That helps," Hite answered.

Hite also cited an earlier GAO opinion saying private donations should not be subject to the same restrictions as regular appropriations.

Later, Hite said he believes the uproar over Watt's parties grew from the larger controversy surrounding his tenure. Interior secretaries, except for Watt's predecessor, Cecil D. Andrus, have held social functions at the Custis-Lee Mansion since 1969, Hite said.

Still, Hite conceded, "it's a tenuous thing--whether a function is official or not. It's more or less in the eye of the beholder."

Yates said he may ask his subcommittee to ban private affairs at all Park Service buildings--particularly facilities like the mansion, the historic home of Robert E. Lee, which has a weight limit on the second floor because of concerns over its structure.