The Soviet Union is exploiting the world's largest system of forced labor, including 4 million involuntary workers estimated to be in 1,100 camps, the State Department charged in a report released yesterday on Capitol Hill.

The report was submitted to Sen. William L. Armstrong (R-Colo.) by Undersecretary of State Lawrence S. Eagleburger in response to a congressional resolution sponsored by Armstrong.

According to Eagleburger, "The Soviet forced-labor system gravely infringes internationally recognized fundamental human rights." He charged that the system is used to produce large amounts of goods for domestic and western export markets and to advance Soviet developmental projects, "often under harsh and degrading conditions."

Of the 4 million people in the forced-labor system, at least 10,000 are considered to be political and religious prisoners, the report said.

The State Department has evidence that forced labor is being used in construction of domestic pipelines, according to Eagleburger. His language was less definite about charges that forced labor has been used on the Soviet-western Europe natural gas export pipeline, saying that "a number of reports suggest" that this was the case in site preparation and other preliminary work.

Publicity about forced labor on the export pipeline, said Eagleburger, "has made Soviet authorities sensitive to the additional problems that would attend future exploitation of forced labor" on that project.

Eagleburger expressed concern about reports of a growing number of Vietnamese workers in the Soviet Union "under conditions which may have violated agreed international labor standards."

According to communist media cited by the State Department, about 11,000 Vietnamese workers are employed in the Soviet Union through a long-term contract between those two countries. "A substantial portion" of the wages is withheld to be credited to the Vietnamese government's account in the Soviet Union, the report said.

Despite some reports to the contrary, the State Department study did not appear to bear out charges that the Vietnamese have been sent abroad to work against their will.

Reports indicate that the youths have volunteered, though perhaps without full knowledge of the harsh conditions they will face, according to the State Department.