While President Reagan moves to slash Agriculture Department subsidies to thousands of farms in the name of fiscal austerity, the Interior Department is proposing to irrigate 408 farms in North Dakota at a cost of more than $1.6 million each.

Assistant Interior Secretary Robert N. Broadbent told the House subcommittee on water and power resources yesterday that the administration supports the irrigation features of a compromise plan for the Garrison Diversion Unit, one of the largest western water projects under construction.

"I come from the most irrigated state, but I wonder how we justify this at this particular time," said subcommittee Chairman George Miller (D-Calif.), who also sits on the House Budget Committee, where one day earlier he heard Office of Management and Budget Director David A. Stockman's call for draconian cuts in farm subsidies.

"There's not a member of this subcommittee that doesn't have a project in their district, but it's a much different day," Miller said.

The Garrison proposal, which would transport water from the Missouri River to farms and towns around North Dakota, has a price tag of $1.1 billion -- including $673 million to irrigate 408 of the state's 36,000 farms and $401 million to build new drinking-water systems for 376,000 people in 130 communities.

The irrigation costs would be repaid by farmers without interest, which translates into an additional $600 million subsidy, Miller said.

Stockman plans to take no position on a bill authorizing the project, according to spokesman Edwin L. Dale Jr., "and that includes not opposing it." The bill, drafted by Interior, was introduced by Rep. Byron L. Dorgan (D-N.D.).

The survival of costly western water projects, even in times of tight money, is a time-honored Washington tradition. But Garrison appears almost inviolate because it represents a delicate compromise worked out over several years by Congress, North Dakota officials, environmentalists, farmers, the administration and the government of Canada.

Garrison for years was branded a "dinosaur" -- designed to irrigate 250,000 acres of farmland, and in the process to flood 70,000 acres of prime waterfowl habitat while possibly polluting Canadian rivers. It was to cost $1.3 billion, and many farmers said they planned to use their irrigated acres to grow wheat and corn, already in surplus.

As opposition grew, Congress last year froze funding for the Garrison project and created an independent commission to convert the "dinosaur" into a project that could meet North Dakota's modern water needs. The compromise, endorsed by Interior, would reduce the area to be irrigated to 130,000 acres and use the savings to build new drinking-water systems, because current supplies are badly contaminated. State officials have proposed a plan to halve the drinking-water costs, to about $200 million.

Even longtime Garrison opponents such as the National Wildlife Federation and the National Audubon Society endorsed the compromise yesterday in the name of putting the long controversy to rest. But officials of both groups expressed ongoing concern about environmental costs of the project.