A controversial $4.4 billion program of security improvements to protect U.S. embassies and official buildings abroad from terrorist attacks is urgently needed despite tight budget restrictions, Secretary of State George P. Shultz said yesterday.

The plan would involve $2.7 billion to buy land, construct new embassies and rebuild facilities at 66 locations around the world, including $89 million for a new office building chancery in Vienna, $83.4 million for a new embassy in Tel Aviv and $41 million for a consulate building in Jerusalem, according to State Department documents. The balance of the $4.4 billion would be used, among other things, to buy armored cars, train security guards and protect foreign diplomats in the United States.

Critics of the proposal say such a huge effort will convert U.S. facilities overseas into forbidding bunkers and surround all U.S. officials with armor plating and bodyguards, drastically changing the nature of the Foreign Service. These critics say it will hurt the U.S. image of openness, limit contact with the local population, and cause terrorists to choose less fortified targets, such as U.S. businessmen.

However, business groups are already lining up to oversee the construction worldwide, most of which will be subcontracted by U.S. firms, according to State Department sources.

Shultz asked for $454.6 million in supplemental security funding for fiscal 1986 to begin the program, and $1.1 billion to continue it next year. He told the Senate Foreign Relations Committee that terrorist threats and attacks on American facilities mean that "we must spare no effort" to protect them. "In this period of budgetary stringency, this task must be a priority," he said.

The senators were generally receptive but expressed some surprise at the price tags. Sen. Daniel J. Evans (R-Wash.) noted a $68 million listing for an office building in Lima, Peru. "That's a pretty hefty office building even in Washington, D.C.," he said.

"These are big numbers, but we have scrubbed them," Shultz replied, adding that he was asking "a lot of cost-management questions" about State Department operations abroad, including whether some facilities should be closed.

"When you build in all these security dimensions, and when you make provisions for communications equipment and worry a lot about counterintelligence aspects, you run the costs up very considerably over . . . a standard commercial building," Shultz said.

The changes involve reinforced concrete walls, which would be "energy loaded" to absorb the force of possible explosions, computer rooms, communications centers, guard towers, walls, "special roof work for communications," and the costs associated with giving each facility a 100-foot setback from the road, other officials explained.

Efforts will also be made to situate facilities out of major populated areas wherever possible, according to other officials. The top-priority projects that would be funded this year include $36 million in Sudan, $50.6 million in Chile, $55.5 million in Jamaica, $59.3 million in London, $59 million in Geneva, $33.3 million in Tunisia, $25 million in Jordan and $25 million in Moscow.

Shultz said that although construction labor costs may be lower overseas than in the United States, foreign customs may require that many more people be employed. He stressed that the new facilities would be designed to remain inviting to the public.

"We will not let the terrorists win their victory by isolating us," Shultz said.

The proposal is based on recommendations made last June by a State Department Advisory Panel on Overseas Security, headed by retired admiral Bobby Inman, former director of the National Security Agency. It would set up special boards to probe security failures, such as the bombing of the U.S. Embassy in Beirut in April 1983, and to fix blame for them.

A new assistant secretary of state would run the department's new Office of Diplomatic Security, which would have about 1,290 employes, Shultz testified.