The Consumer Product Safety Commission is leading an interagency effort to develop a cigarette that will go out when a smoker stops puffing and thus prevent deaths and injuries caused when cigarettes start house fires.

In 1983, 34,100 fires were set off in mattresses, bedding and upholstered furniture, causing 1,270 deaths.

CPSC Chairman Terrence M. Scanlon serves as the head of the Interagency Committee on Cigarette and Little Cigar Fire Safety, which also includes representatives of the Health and Human Services Department and the U.S. Fire Administration.

The committee and its 15-member technical staff are waiting for money to be appropriated for a two-phase testing program. Laboratory tests will first be performed on commercially available cigarettes. Then the staff will try to identify the physical characteristics of cigarettes that do not ignite easily.

"We want to come up with the ideal cigarette," said Harry Cohen, CPSC's director of program managment, who heads the committee's technical group. "Then, we want to make sure that cigarette is commercially feasible and wouldn't pose more health risks than those already on the market."

Cohen estimated that the committee would need $2.7 million to complete its work during the 30 months that Congress mandated for the project. The CPSC has set aside $150,000 in fiscal 1985 for the project, and Scanlon said yesterday that he had received a commitment from the Office of Management and Budget for $500,000 more this year. "Where the remainder of the money will come from is unclear," Cohen said.

Congress passed a bill setting up the interagency panel in October 1984. Although the cigarette industry initially opposed it, the manufacturers have cooperated since then and the American Tobacco Institute has four members on the technical study group, Cohen said. BUDGET HEARINGS

CPSC Commissioner Stuart M. Statler was the only commissioner to protest the agency's proposed fiscal 1986 budget at a hearing April 23 before a House Appropriations subcommittee.

Statler said that with inflation taken into account, President Reagan's proposed budget represented a 53 percent decrease in real dollars for the agency since fiscal 1974. "No other federal health or safety regulatory agency comes anywhere close to this precipitous decline," Statler said. "In fact, EPA's budget has jumped 87 percent during the same period and OSHA's has risen 32 percent."

Statler said that because of the cuts, the agency would have to delay plans to study the effectiveness of the chain-saw manufacturers' voluntary standard designed to curb injuries when a chain saw kicks back.

"Dead in its track -- at least for now -- is the joint effort planned with that industry to address non-kickback injuries, responsible for some 85,000 medically attended injuries annually," Statler said. STUN GUNS .

The CPSC has taken issue with a recent Newsweek article on so-called stun guns -- hand-held devices that pump electric charges into an attacker's body. Such a device, the flashlight-shaped Taser, is used by police in every state but Alaska.

Newsweek quoted a Taser manufacturer who said that the devices don't cause lasting harm and that the CPSC had given the device a clean bill of health. Scanlon said that the CPSC had not taken a position on the guns because the commission has no authority over them.