Several months ago, James G. Watt sent President Reagan an account of his first year as Interior Department secretary. Packaged in a slick booklet that resembled a corporation's annual report, illustrated with photographs of American wilderness and wildlife, the Watt report was entitled: "A Year of Change: To Restore America's Greatness."

Yesterday, the 2.8 million member National Wildlife Federation, the nation's largest conservation group, released its own slick volume on Watt's tenure. Not surprisingly, it took a markedly different tack. Its title: "Marching Backwards."

The report concluded that Watt, who as secretary of the interior manages one-third of America's land mass, is squandering the nation's natural resources. Watt has encouraged development of the energy and mineral potential under public lands, neglecting his responsibilities as the "nation's chief conservation officer," the federation said.

"A strong patriot, Mr. Watt has either forgotten or ignored the simple management philosophy counseled by an equally patriotic founding father, Benjamin Franklin: 'Waste not, want not,' " the report said.

The group sent an advance copy to the White House, urging Reagan to stop Watt's "ill-advised and destructive policies." Both Watt and the White House declined comment. No administration officials had read it, according to spokesmen.

The federation's report, written as a response to Watt's glowing annual summary and its claim of "extraordinary success," contended that Watt's boasts are based on inaccuracies.

Watt wrote that when he arrived at interior he "found the pendulum in far left field," guided by policies that amounted to a "war on the West." He claimed that past policies amounted to a lock-up of America's natural resources, leaving the nation dangerously dependent on foreign energy sources.

But "Marching Backwards" said that energy development has been restricted by the market, rather than by conservationist interior policies. Exploration of the Outer Continental Shelf, which Watt plans to offer for leasing over the next five years, languished because it is dangerous and costly, the report said.

It concluded that Watt's plan to lease large federal acreage to oil, gas, mineral and coal concerns will "transfer development rights to our public lands to the private sector at bargain rates."

The report also criticized Watt for using the interior budget to change policy. He has cut funds for conservation and environmental planning, stopping planned acquisitions of national park land and cutting programs that protect endangered species, while increasing the budget for leasing programs, the report said.

Watt has repeatedly characterized himself as a "steward" of existing public lands and spurning expansion.

Watt's annual report also was greeted coolly in Congress, where Democrats on the House Appropriations Committee questioned its claim that no subcommittee had voted against any of Watt's "major changes."

Rep. Sidney R. Yates (D-Ill.) reminded Watt at a recent hearing that his subcommittee barred interior from issuing oil and gas leases off the pristine northern California coast, a move that won bipartisan support on the House floor.

That issue, Watt responded, was not "major."

To which Yates countered: "The whole Congress, the whole country, all the officials in California, Republicans and Democrats, had the impression" that it was major