An aging Mafia "soldier" admitted killing a Bronx man last year to keep him from testifying in a special prosecutor's investigation of Labor Secretary Raymond J. Donovan, a state court jury was told today.

The confession was attributed to Salvatore Odierno, 68, one of the accused murderers of Nat Masselli, 31, who was shot in the back of the head as he sat at the wheel of his car on Aug. 25, 1982.

Odierno's reported statements were recounted on the witness stand by a former convict who said he befriended Odierno in prison last fall. Odierno is on trial for willful murder.

The witness, an informer for various government agencies since 1967, testified at Odierno's trial here under the pseudonym "William Burns."

According to the informer, "Sal said that was the reason he was in jail . . . was that if it wasn't for the Silverman Commission sic , this hit would not have gone down."

As a special prosecutor appointed under the Ethics in Government Act, New York lawyer Leon Silverman spent nine months last year investigating allegations of ties between Donovan, who is a former New Jersey construction company executive, and organized crime. Donovan repeatedly denied the allegations under oath.

Burns testified today that Odierno said he and a reputed Mafia captain, Philip Buono, 68, arranged a meeting with Masselli in a well-lit neighborhood opposite Van Cortlandt Park in hopes of getting his promise not to testify in the Donovan case.

Burns said Odierno told him that, when Masselli balked, Odierno, sitting in the front passenger seat of Masselli's two-door Lincoln, slapped him, knocking his head against the window on the driver's side.

The engine was running and, the jurors were told, Masselli inadvertently jerked the car into gear, then slammed on the brakes.

At that, Burns testified, Odierno recounted that a listening device fell on the floor of the car. " . . . ' He's wired. Shoot him, Philly,' " Odierno was quoted as saying.

Federal authorities denied at the time of the shooting that Masselli had been working for them or was wearing a listening device at their behest.

In his final news conference last September, Silverman said, "Masselli was not an informant, and he never wore any electronic surveillance or eavesdropping devices on his person."

Silverman ended his inquiry shortly after the Masselli shooting, citing "insufficient credible evidence" to warrant prosecution of Donovan.

Silverman also said he had ordered an FBI investigation into the killing to see if it involved obstruction of justice.

But Silverman said, "There appears to be no evidence of a relationship between the Masselli murder and Secretary Donovan."

Today's testimony outlined a determined gangland effort to keep Nat Masselli and his imprisoned father, William, from cooperating with the Silverman investigation.

"Sal spoke about the fact that he was afraid of the grand jury investigations or any kind of investigation that would hurt himself or friends or people he had and his friends had in high office," Burns testified.

A reputed loan shark and member of the Genovese crime family, Odierno allegedly started confiding in Burns out of exasperation at media coverage of the killing. Some newspaper reports portrayed him and Buono as a superannuated gang that had botched the job by killing Masselli on a lighted street in view of hundreds of witnesses.

Burns, whose real name has been supplied to defense lawyers, told the jury that Odierno kept telling him that Odierno and Buono were "businessmen, not jerks," and that they had planned to take Masselli to a secluded spot in Yonkers to kill him if he proved recalcitrant.

"He said the reason the job was botched could happen to anybody," Burns said.

"He said that . . . if they the Massellis were allowed to testify or cooperate, that it would be 30-to-life federally, and everybody would go from the top down, whereas dead, the only thing could happen was two, maybe one would go to prison or if they were lucky, nobody would go," Burns added.

William Masselli, another reputed member of the Genovese family, had been head of an excavation company that did millions of dollars worth of business as a subcontractor on New York subway projects for Donovan's firm, the Schiavone Construction Co. He had been the focal point for several allegations that Donovan and his company were "mobbed up."

According to today's testimony, Odierno said he "and a close friend of his who he called 'Chink' had loaned money" to various people, including William Masselli, for construction businesses.

"Sal said the reason Philly contacted him to go along on the job" and persuade both Massellis not to talk was that "Sal was going to wash the notes away" in return for their silence, the court was told.

By Burns' account, William Masselli, contacted in prison, agreed to keep quiet, but warned that he could not speak for his son, who "could do as much damage if he were to testify."

Odierno's defense attorney, Louis Aidala, spent the afternoon hammering at Burns' credibility and depicting him as an unstable individual who had a psychiatric "episode" last December in which he imagined that he had once been a woman.

Donovan's name came up twice during today's testimony.

According to Burns, Odierno claimed to have met Donovan once, "in a club at a party," and asserted that "his close friend Chink had business dealings with him."

At another point, Burns testified, "Sal said Mr. Donovan was just another construction operator who was looking to buy contracts and then would run out of money, would need money, and Sal said, 'If it wasn't for the favors you could get in return, I would never deal with punks like this.' "

Speaking through his press secretary, Michael J. Volpe, Donovan said tonight that he "never met Odierno, this fella 'Chink' or Burns."

"We just have to go by his alias," Volpe said when told the witness' real name.

Donovan also stated, "I cannot comment about jailhouse conversations between and about people I have never met in my life. I might add that I have no way of knowing what goes on in or motivates the criminal mind."