Undersecretary of Education Gary Bauer yesterday opened the department's fall offensive for school prayer and other religious issues by blaming public schools for decay in the nation's morals by failing to transmit proper values to the young.

In a strongly worded speech prepared for delivery to an antipornography conference at the National Consultation on Pornography, Bauer, the No. 2 official in the Education Department, called pornography "a blight upon our public life," and blasted groups such as the American Civil Liberties Union for seeking to extend constitutional protections to pornographic materials.

While the speech was aimed at an antipornography audience, Bauer said in an interview that he was addressing larger questions, which he sees as a breakdown of society's moral values, including the rise of drug abuse, teen-age alcoholism and suicide. He laid the blame on the doorstep of the public school system, which in the 1970s began experimentation with "value-neutral" curriculum.

He linked obscenity to the lack of public school prayer and other religious issues saying the public will no longer respect laws that protect pornography "especially when those same laws discriminate against those children who seek to pray in our public schools."

"When pornography is protected in the name of 'freedom,' our children receive a very disturbing message -- since pornography is allowed, it is all right," Bauer said.

"And when pornography is defended by an appeal to lofty constitutional principles, our children receive an even more disturbing message -- that pornography is one of the 'blessings of liberty' that our Constitution seeks to protect," he added.

In the speech, Bauer said, "Our schools must drop the ridiculous notion that it is possible to teach without teaching values." The idea of "value-free" education, he said, is "morally disarming and intellectually bankrupt."

Bauer was picking up a theme mentioned by President Reagan, in his last major speech on education Feb. 28 at the Washington Hilton hotel. There, Reagan said "students should not only learn basic subjects, but basic values. We must teach the importance of justice, equality, religion, liberty, and standards of right and wrong."

Education Secretary William J. Bennett, using that theme, has also called on schools to teach young people "character" as one of his three "C's" of education, along with "content" and "choice."

The issue of pornography has posed a painful dilemma for civil liberties groups on the political left, who deride efforts by the religious right to censor obscene materials but do not enjoy being seen as defenders of pornography.

Barry Lynn, legislative counsel for the American Civil Liberties Union here, called Bauer's Cincinnati speech the latest in a series of conservative assaults against pornography.

"There is a lofty principle at stake here," Lynn said. "People have a right in this country to read material about religion, politics, and indeed sex . . . . There is no way he can say that pornography is a threat to our way of life."

Bauer, Bennett's main link to New Right groups, said in his speech that, "Pornography is a threat to our democratic way of life. It is also a threat to the larger cause of Western culture."

"Nothing is more outrageous than hearing the purveyors of filth wrap themselves in the Constitution and accuse millions of decent men and women in communities across the land of being a threat to liberty," Bauer said. "They have it exactly backwards."