The Reagan administration's ambitious plan to sell public housing units to low-income tenants cleared its final hurdle this week as a House Appropriations subcommittee backed off from a threat to kill the program.

The Housing and Urban Development Department has received applications from 35 public housing authorities -- including those in the District, Baltimore, Philadelphia, St. Louis, Hartford, Conn., and Nashville -- that seek to sell apartments to their tenants. HUD expects to announce its choices for a demonstration program within two weeks.

In an eleventh-hour compromise with the appropriations subcommittee that oversees HUD, the department agreed to nearly halve the program and to sell no more than 2,000 units. HUD also agreed to spend no more than $500,000 on technical assistance grants to test the idea, which was announced a few weeks before November's election.

The appropriations panel, chaired by Rep. Edward P. Boland (D-Mass.), warned HUD last week that it should spend no money on the program. Boland told the agency that since the money is not earmarked in the budget, it amounts to a "reprogramming" that needed the panel's approval.

Technically, Congress has no authority to block such reprogramming requests, and HUD has shifted funds for dozens of small initiatives without objection. In practice, however, federal agencies rarely defy such orders from the committees that control their purse strings.

The panel agreed to the compromise after some quick White House lobbying and a call to Boland from HUD Secretary Samuel R. Pierce Jr.

"This is an approach the administration feels strongly about, from the president on down," said June Q. Koch, HUD's assistant secretary for policy development and research. "It's a small-scale demonstration to see if it works; the committee knows that. All the objections they raise are to a full-scale program of massive sales."

Boland has questioned whether poor tenants who buy their units will be able to afford utilities and other charges. Some critics call the plan part of a larger administration effort to take the government out of the public housing business.

"The real concern is that there's no money in the budget for additional public housing and that we'd have too many units taken out of circulation," said Rep. William H. Boner (D-Tenn.), a subcommittee member who is sympathetic to the plan. "Are they going to pull out all the best units and leave the shoddy ones? That's one of the things we in Congress will have to monitor."

Under the program, HUD will sell public housing units to qualified tenants for a fraction of market value, in some cases for as little as a dollar. Buyers would not be able to sell the units for a profit for at least five years, and tenants who do not participate would be protected against eviction.

The HUD approach is less sweeping than a Heritage Foundation plan, being pushed by Rep. Jack Kemp (R-N.Y.), that would bypass local officials and give at least 20 percent of public housing tenants the right to buy their units at low cost.

Koch said that the apartments sold "would still be targeted for poor people" and that with a nationwide public-housing stock of 1.3 million units, the initiative will be "a drop in the bucket."

Koch said the administration wants to move away from a longstanding liberal approach of "paternalistic control of the poor. There's a philosophical assumption that low-income families are irresponsible, which I don't buy. When you own something, you take pride in it."