CIA Director William J. Casey said yesterday that the United States must counter the Soviet Union in the Third World with a strategy that emphasizes "basic human rights" and the virtues of democracy, including press freedom.

"It is past time for the American government--executive branch and Congress--to take the Soviet challenge in the Third World seriously and develop a broad, integrated strategy for countering it," Casey said.

Casey made his remarks at Westminster College in Fulton, Mo., where British prime minister Winston Churchill held forth 37 years ago with his famous speech about the "Iron Curtain" that the Russians were drawing down in Eastern Europe.

Invited--over faculty dissent--to deliver the 40th John Findley Green Foundation lecture, Casey gave a remarkable speech that in many ways sounded like a text from the Carter administration.

To deal with all the threats the Soviets pose, from nuclear missiles to "creeping imperialism," Casey declared, "We must maintain a strategic posture that convinces the Soviets that the risk of any attack on the United States or its allies far outweighs any possible benefits. But more than that is necessary."

Warning that "a Cubanization of Central America would quickly create new refugees by the millions," the CIA director said that the United States needs "a realistic counterstrategy" there as elsewhere, one that would "represent a sensible American approach to the Third World whether or not the U.S.S.R. is involved."

Essential ingredients of that strategy, Casey argued, are:

* Greater attention to "our friends and neutrals" around the world before U.S. attention is commanded by coups, insurgencies or instability.

* Demands, "tactfully and privately" delivered, "that our friends observe certain standards of behavior with regard to basic human rights" and issues such as "land reform, corruption and the like."

* Readiness "to help our friends defend themselves," including counterinsurgency training and changes in U.S. laws to permit quicker provision of arms for self-defense.

* Mobilization of "our greatest asset in the Third World, private business."

But the final weapon, Casey submitted, is one "we can deploy around the world....we must foster the infrastructure of democracy, the system of a free press, unions, political parties, universities, which allows a people to choose its own way...."

Casey said Grenada "provides a vivid illustration of how the Soviets practice 'creepting imperialism' by proxy. Early reports indicate that, in addition to the Cubans on the island, Soviets, North Koreans, Libyans, East Germans and Bulgarians, mostly working out of the Soviet embassy, were working together to establish a military base in the eastern Caribbean."

In a meeting Oct. 4, the Westminster Faculty Council, some of its members asserting that Casey's past business dealings raised questions about his honesty, passed a resolution calling on the college to withdraw the invitation. However, the board of trustees voted to stand by the invitation.