A senior Reagan administration official warned Congress yesterday that failure to approve a $354 million arms sale request for Saudi Arabia would push America toward a "parochial" and "extremist" U.S. policy in the Middle East in favor of Israel.

Testifying before the Senate Foreign Relations Committee, Assistant Secretary of State Richard W. Murphy said that for the first time in 30 years the United States' "balanced approach" toward the Arab nations and Israel was in jeopardy because of strong congressional opposition to arms sales to Saudi Arabia and Jordan.

The opposition has already caused the administration to scrap a $1.9 billion arms sale for Jordan, and the fate of the Saudi request, with 63 senators backing a resolution sponsored by Sen. Alan Cranston (D-Calif.) that would prohibit the sale, remains in doubt.

The administration seeks to sell Saudi Arabia 2,600 ground-to-air and air-to-air missiles, including 800 shoulder-fired Stinger missiles, which would be delivered between 1989 and 1991. The Saudis already have about 2,500 missiles in their arsenal.

Murphy said the United States' balanced approach in the Middle East now faces "a time of testing" and raised the question whether "we will turn around and pursue a more parochial, narrow, and in my view, extremist policy."

"U.S. interests in the region are best served by continued strong, open and credible relations with moderate Arabs," he said.

Murphy argued that no new arms were being sold to Saudi Arabia and that it was important to send Iran, which has recently escalated its war against Iraq, "a political signal" of U.S. support for its moderate friends in the Persian Gulf.

Murphy, who was joined by Assistant Secretary of Defense Richard L. Armitage in defending the Saudi arms request, ran into a barrage of criticism from committee members over Saudi support for the Palestine Liberation Organization and Libyan leader Muammar Qaddafi as well as Saudi failure to support more publicly the U.S.-backed Middle East peace process.

Cranston, rejecting the administration's argument that the arms sale was "a test" of American friendship of Saudi Arabia, turned the question around to ask Murphy, "When do we earn the right to ask from the Saudis more sensitivity to America's basic concerns?"

The Cranston measure rejecting the Saudi missile sale -- a joint resolution sponsored by Rep. Mel Levine (D-Calif.) in the House -- is expected to easily pass Congress the first time around.

However, President Reagan is expected to veto the resolution, which would then require a two-thirds vote in both houses to override his action.

At present, Cranston is four votes short of the necessary two-thirds vote. An aide to Foreign Relations Committee Chairman Richard G. Lugar (R-Ind.) predicted that a number of senators supporting the Cranston resolution might change their minds when it came time to challenging a presidential veto.