President Reagan urged the Senate yesterday to confirm embattled conservative Daniel A. Manion as a judge of the 7th U.S. Circuit Court of Appeals, and accused Senate Democrats of engineering the defeat of some of his judicial and legal nominees merely because they were conservatives.

The president also called for Senate confirmation of William H. Rehnquist as chief justice and Antonin Scalia, an appeals court judge, as an associate Supreme Court justice. Both are considered strong conservatives.

In his weekly radio address from Camp David, the president accused the Democrats of "partisan use of the confirmation process." The address was a sharp counterattack to a surprisingly successful Democratic effort to thwart Reagan's efforts to reshape the judiciary in a conservative mold.

"The real objection to Dan Manion is that he doesn't conform to the liberal ideology of senators," declared the president, saying he had "sent a letter to the Senate expressing my strong opinion about the prerogative of the president to make qualified appointments to the federal judiciary."

A copy of that letter was released by Senate Majority Leader Robert J. Dole (R-Kan.), according to United Press International. Reagan is reported to have said, "Dan Manion's political views are close to my political views. In particular, Dan Manion's belief that federal judges should interpret the law and not impose from the bench their social or philosophical notions upon society, is my belief. That is the real reason this nomination is encountering such hostility."

But Sen. Paul Simon (D-Ill.) said in a statement, "There is a marked decline in the quality of these appointments . . . and that is the issue in the Manion nomination."

The stakes in the dispute are larger than Manion's nomination, which is expected to reach a Senate vote this week or next.

In the past year, Senate Democrats and some Republicans such as Charles McC. Mathias Jr. (Md.) and Arlen Specter (Pa.), backed by a coalition of liberal, civil rights and civil liberties organizations, have blocked a number of important nominations. They killed the nomination of administration civil rights chief William Bradford Reynolds to be associate attorney general and of Jeffrey I. Zuckerman to be general counsel of the Equal Employment Opportunity Commission. Also rejected was Jefferson Beauregard Sessions III as a federal judge.

In the Judiciary Committee, the Manion nomination failed to win approval on a 9-to-9 vote, and thus goes to the floor without a favorable committee recommendation.

Opponents coupled allegations of extreme right-wing views or insensitivity on racial matters with charges of lack of judicial temperament or legal distinction. Sens. Joseph R. Biden Jr. (Del.), Edward M. Kennedy (Mass.) and Howard M. Metzenbaum (Ohio) have been among Democrats opposing Manion and some of the other nominations.

Administration officials are said to think that Democrats have found a formula in these charges for their effort to thwart Reagan's attempts to remake the federal judiciary and legal agencies. They are said to believe that a counterattack was needed to prevent further trouble on nominations. A White House spokesman agreed yesterday that the president's remarks on Manion should be interpreted as the start of a counterattack.

At a Senate Judiciary Committee hearing April 30, Democrats questioned whether Manion held such extreme right-wing views that he should not sit on the federal bench.

They cited Manion's sponsorship as an Indiana state senator of a bill to allow the Ten Commandments to be posted in the public schools two months after the Supreme Court ruled that such postings are unconstitutional, and 1971 statements urging that the Supreme Court be stripped of some its jurisdiction and declaring that antiwar demonstrators "should be penned up." Democrats also questioned whether his legal background in a small South Bend law practice was adequate to qualify him to sit on a federal appeals court. Manion has been strongly defended, however, by Indiana's two senators, Dan Quayle (R) and Richard G. Lugar (R).

Reagan said he is trying to name "tough, responsible judges" because "the scales of justice have become seriously unbalanced" and it is "difficult to convict criminals."