Education Secretary William J. Bennett yesterday proposed abolishing the controversial National Institute of Education as part of a long-awaited plan to reorganize his department's research functions.

The plan is an attempt to bring the department's research units more closely under Bennett's control through a new, more powerful assistant secretary for educational research and improvement.

It also represents an effort by Bennett to placate members of the New Right, who have long demanded that the NIE be abolished because of what they see as its liberal tilt.

Under the law that created the Education Department, Bennett is required to give Congress 90 days' notice of reorganization proposals to give members a chance to comment. The plan will take effect at the end of that period unless Congress passes legislation to block it.

Under the plan, the presidentially appointed positions of NIE director and deputy director would be abolished, and the institute's work would be divided into five new offices -- a research office, a statistics center, an information service, a library program office and a program for "improvement of practice."

Those new offices would be placed in a new Office of Educational Research and Improvement (OERI). Vanderbilt University professor Chester R. Finn, a former aide to Sen. Daniel Patrick Moynihan (D-N.Y.) and an architect of the NIE, has been nominated as assistant secretary for that area. His confirmation hearing has been scheduled for mid-July.

Bennett and his aides said the plan was an effort to eliminate duplication in research while streamlining some of the many layers of bureaucracy now involved in education research.

"We will eliminate overlapping and conflicting authority at the top," Bennett told reporters. "This is a streamlining and consolidation."

The plan, however, will not touch the separate research-gathering functions of the Office of Vocational and Adult Education, the Office of Bilingual Education and Minority Language Affairs, and the Office of Special Education and Rehabilitative Services.

Those popular programs have well-entrenched constituencies who have formed their own alliances on Capitol Hill, and any attempt to bring them under Finn's control probably would have been fiercely resisted -- and might have torpedoed the plan from the outset.

"There are certain political realities," said Wendell L. Willkie II, Bennett's chief of staff. "Certain members of Congress want to see particular research functions lodged with particular offices."

The plan, however, does call for a new department-wide task force, to be chaired by the assistant secretary, that will coordinate all research activities.

The plan is not expected to save any money, although Bennett said the money already being spent will now be used more efficiently.

Initial congressional reaction to the proposal was positive, although most members were out of town for the Fourth of July recess. A spokesman for Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Labor and Human Resources Committee, said, "It's a step in the right direction."

On the House side, education experts said they knew of no real opposition to the plan, which House members were briefed on two weeks ago.

The plan is unlikely to mollify New Right conservatives, who wanted the NIE abolished, but will now see it replaced by five separate -- though less powerful -- offices. Said one longtime NIE critic, who asked not to be quoted by name: "I think it's worse than the status quo . . . . Abolishing the director of NIE does tend to enhance the authority of the assistant secretary. But on the other hand, they have cloned the director."

Over the last few years, the institute has been one of the most emotional and sometimes bizarre of Washington's ideological battlegrounds.

The Heritage Foundation, in its blueprint for Reagan's first term, criticized results of federally funded education research projects for being "at best spotty and inconclusive; at worst, they have been programs for indoctrinating students in ethical relativism and social determinism."

Conservatives took those criticisms to heart. The Reagan administration's first NIE director, Edward Curran, circulated proposals to redirect research grants to projects that study conservative themes, terminated long-running contracts at 17 research centers, and began reassigning some top employes. Education Secretary Terrel H. Bell fired him after Curran wrote President Reagan, asking that the institute be abolished.

A year later, another education official, Robert Sweet, who headed a research advisory council, was forced out of his job for trying to set up a "New Right think tank" within the department and gain control of NIE.

Bennett yesterday declined to comment on NIE's recent history. "NIE has a mixed record," he said.