Eight years after the federal government created a special agency to promote fire prevention and improve fire-fighting, the Reagan administration has decided it is no longer needed.

While the president's fiscal 1983 budget acknowledges that the U.S. Fire Administration "has improved the cost-effectiveness of the various fire protection services," it said that "due to the significant decrease in loss of life and property due to fire and the increased efforts of the private sector," the agency should be abolished.

Unless Congress acts to save it, the Fire Administration, now part of the Federal Emergency Management Agency, will go out of business in October and its programs will be dispersed to other agencies.

The notion that fires are on the decline and that industry and local governments can deal with the problem has outraged professional and volunteer firefighters, their unions and associations, as well as congressmen who still have the Fire Administration under their jurisdiction.

"I do not believe that a significant decrease in life and property losses has, in fact, occurred," said Tulsa Fire Chief E. Stanley Hawkins, president of the International Association of Fire Chiefs. "The significant indirect losses associated with fire will continue to have a negative impact on our nation's economic recovery by putting individuals out of work and reducing the tax base."

Although estimates vary, more than 6,500 persons were killed by fires in 1980, compared with 8,300 in 1974. In addition, 134 firefighters were killed in 1980 and more than 28,000 people injured in fire-related accidents. The Fire Administration says $5.9 billion in direct losses were caused by fires in 1980, up from $5 billion in 1974. It says indirect losses have stabilized at $300 million a year over the past few years; however, the Fire Protection Association puts that figure at $15 billion in 1980.

The Fire Administration was created in 1974 after state and local officials and fire-fighting groups had fought for six years to bring a national focus to fire safety issues.

Its goal for the year 2000, according to the president's budget, was to reduce the loss of life from fires by 50 percent and to achieve "significant reductions" in property damage and injuries caused by fires. To that end, it has promoted fire education programs, arson prevention, the development of new equipment for firefighters, and the use of fire protection devices such as smoke detectors and sprinkler systems. Until 1978, when FEMA was created, the Fire Administration was an independent agency.

Under the Reagan administration proposal, only about half of the agency's $8.5 million budget would be cut. The National Bureau of Standards' Center for Fire Research, which worked exclusively for the Fire Administration and received $4 million of its budget, would continue, with its budget transferred to the Commerce Department. The National Fire Academy, another FEMA division that provides state-of-the-art courses to fire fighters, would pick up about a third of the Fire Administration's programs with no increase in funding.

FEMA director Louis O. Giuffrida and Fire Administrator B. J. Thompson refused to discuss the proposal. At a Senate hearing in April, Giuffrida said the decision "supports the national mandate to reduce the size and costs of multiple federal agencies' involvement in state and local programs."

The administration, however, is having a tough time selling Congress on the idea of abolishing the agency. Because the agency still has a year left in its three-year authorization, it has to get by only the two appropriations committees, rather than the authorizing committees as well. Hill aides say they think the members will restore the agency's funding.

Sen. William V. Roth Jr. (R-Del.), whose Governmental Affairs Committee held hearings on the agency, also has asked budget director David A. Stockman to explain why OMB has not submitted a reorganization plan for the agency. OMB officials said they had no comment.

"This is simply the wrong time to eliminate the only federal focus. . . for fire prevention and arson mitigation," said Rep. Doug Walgren (D-Pa.), chairman of the House Science subcommittee on science, research and technology. Eliminating the agency, he said, would be "short-sighted and counterproductive . . . to reducing this country's appalling loss of life and property in fires."

The administration "has been increasing civil defense by so much, at the same time cutting training programs for the person at the forefront of combatting just about any emergency, the fire fighter," said Margaret Hecht, a member of Roth's committee staff. "It's a horrible political move. I'm sure they didn't realize the potential implications."