The Reagan administration formally proposed yesterday to give the nation's school systems more flexibility to decide whether to offer bilingual education to foreign-speaking students or to substitute other types of programs.

The Education Department released the text of regulations stating that local school systems "are in the best position to make these educational judgments."

Education Undersecretary Gary Bauer said the department's regional civil rights directors will notify all school districts now offering bilingual education under binding agreements with the government that requests for modifying those agreements will be considered.

More than 400 school districts negotiated such agreements, known as Lau remedies after the plaintiff in a 1974 Supreme Court decision. The government has used that decision to require school districts to establish programs for children with limited skills in English. Most use the bilingual method, which instructs children in their native language until they learn English.

A memorandum to the regional civil rights directors, signed by Harry M. Singleton, assistant education secretary for civil rights, states that school districts should be notified "that they may implement any program that takes affirmative steps to provide for the effective participation of language minority students in their educational programs."

The regulations were to be published today in the Federal Register for 60 days of public comment before a final version is released. They follow the outlines of a speech by Education Secretary William J. Bennett in September that unleashed a round of criticism from bilingual advocacy groups and some opponents in Congress.

Bauer repeatedly stated yesterday that the Reagan administration is not out to dismantle the bilingual education program, despite doubts raised about whether it is the best method to teach children, but wants to give local schools increased discretion.

"We are trying to send a message to the school districts around the country that they have a good deal more flexibility . . . than they currently perceive," Bauer told a news conference.

The regulations govern programs under Title VII of the Elementary and Secondary Education Act, also known as the Bilingual Education Act. In the current fiscal year, it provides $77.5 million for bilingual education programs and $5.4 million for alternative programs, such as English as a Second Language (ESL), where children take English classes with their regular courses, and an intensive "immersion" program in English.

Bauer said the government will ask Congress to change the law to allow more money to be spent on alternative programs, and if Congress agrees, will ask for a funding increase of "more than a symbolic amount."

Rep. Augustus F. Hawkins (D-Calif.), chairman of the House Education and Labor Committee, said yesterday he remains critical of Bennett's attempts to redraw the bilingual regulations.

"Bilingual education is a successful method to teach English to children based upon the department's own studies," Hawkins said in a statement.

The proposed regulatory changes are expected to have little effect in the Washington area. Only two area school districts, Montgomery County and the District, offer bilingual education programs, and both offer other types of classes for limited-English students as well.