President Reagan yesterday defended his attorney general's investment in a controversial oil and gas tax shelter. He also said his confidence in his labor secretary has not been "reduced" by anything he has heard about the special prosecutor's investigation of him.

Appearing in the White House press room for a brief question-and- answer session with reporters, Reagan brushed aside the controversy surrounding Attorney General William French Smith's $16,500 investment in a tax shelter late last year that gave him about $66,000 in tax deductions, twice the amount permitted by an Internal Revenue Service ruling.

Reagan indicated he not only believed that the deductions were proper but also that they were made without Smith's knowledge by the administrators of the blind trust in which his holdings were placed. A spokesman for Smith said two weeks ago that the attorney general personally decided to invest in the partnership, which filed a certificate listing investors at 4 p.m. last Dec. 31, eight hours before the end of the tax year.

"With regard to the attorney general's problems there," Reagan said, "I don't think the point's been made by anyone that the so-called 'tax shelters' are things passed by Congress to encourage investment or speculation in certain undertakings.

"And a tax shelter is only a shelter if you lose your investment. You actually enter it with the hope and the prospect that you will earn additional money from that investment, in which case you'll owe additional tax. And the fact is that, like so many others who have gone into government service, this was done by someone that the attorney general trusts to handle the investments he may have."

Smith's spokesman, Thomas P. DeCair, said two weeks ago that the attorney general "did it himself despite his blind trust that holds his assets."

The president was correct in saying that investors have to pay tax on earnings from tax shelter investments. He was also partly wrong, however, in saying that it is only a shelter when the investor loses his investment.

A shelter is an investment that may or may not produce income; if it does that income is taxable. In the meantime, the shelter also created deductions that offset income from other sources, "sheltering" it from the tax collector irrespective of whether the shelter investment itself ever pays off.

Regarding the investigation of allegations that Labor Secretary Raymond J. Donovan as a New Jersey construction company executive had dealings with organized crime figures and attended a luncheon meeting where a bribe was paid a union official, Reagan said:

"It is very difficult . . . for me to comment on that because it is now in the hands of a special prosecutor as Secretary Donovan himself requested some time ago. But nothing I've heard has . . . reduced my confidence in Secretary Donovan."

Aides said Reagan has privately expressed doubts about the veracity of Donovan's accusers and probably would have said so were it not for his concern about speaking out while the matter is under investigation.

In the press briefing, Reagan also:

* Said he was attempting to build a "realistic relationship" with the Soviet Union with the aim of reducing arms. Reagan sidestepped the question of whether he had discarded the policy enunciated at the beginning of his administration of linking arms talks to Soviet behavior around the world and he also declined to say whether the U.S. relationship with the Soviets is warming or cooling. "I wouldn't know whether I could apply either one of those words to it. It is just that we are willing, realistically, to sit down with the Soviet Union and try to eliminate some of the friction points that are there," he said.

* Declined to describe in detail the contents of the letter he received from Soviet President Leonid I. Brezhnev late last week, other than saying it expressed a willingness to meet soon but with no reference to specific timing.

* Emphasized again that there were no plans to send troops as part of U.S. support of the British in the South Atlantic Falkland Islands dispute with Argentina and declined to say how much military support the United States is willing to provide the British.

"There are no new agreements that have come out of this at all," he said. "There are certain bilateral agreements and our relationship in the North Atlantic Alliance that we fulfill regardless of what's going on there."

Reagan appeared to knock down published reports that he was considering curtailing his visit to Great Britain next month because of the Falklands crisis.

"I haven't seen anything as yet that would suggest that," he said. "Obviously, if something unforeseen happens, we would have to consider whether we should go or not. But, no, I see no reason not to go."