Citing budget pressures and a steady growth in the American Indian population, the Reagan administration has proposed to limit eligibility for free Indian Health Service care to those with at least one-quarter and in some cases one-half Indian blood.

The National Congress of American Indians, comprising more than 150 tribes, opposes the change, according to Washington spokeswoman Karen Funk, not only because it would reduce eligibility -- by up to 150,000 of the present 987,000, according to some estimates -- but also because it views the change as dictating how the tribes should define who is an Indian.

"We're going to fight it," she said, adding that she hoped for continued support from Rep. Sidney R. Yates (D-Ill.) and other lawmakers who have backed health services to Indians in the past.

Aides to two key House members with jurisdiction over Indian health programs, Interior Committee Chairman Morris K. Udall (D-Ariz.) and Energy and Commerce health subcommittee chairman Henry A. Waxman (D-Calif.), said they are deeply concerned with the proposed changes. According to one estimate, the number of eligible Indians in California would be slashed by two thirds.

The tentative regulation was published June 10 in the Federal Register by Health and Human Services Secretary Otis R. Bowen with a request for public comment. It would become final in four months.

For the purpose of determining who receives benefits, the regulation would define Indian or native Alaskan as a person who is a member of a federally recognized tribe or eligible to be a member, lives on or near a reservation and has at least one-quarter Indian blood.

A person who is not a member of a federally recognized tribe or eligible for membership would have to live on or near a reservation and have one-half Indian blood. At present, a person need only belong to an Indian community, which is not defined, and live on or near a reservation. There is no blood requirement.

A Udall aide said about half the tribes already require one-quarter or more Indian blood, but many others -- such as the Oklahoma Cherokees -- recognize persons with an eighth, a sixteenth or even less.

The proposal was published only a few weeks after the Congressional Office of Technology Assessment reported that despite decades of government attention to their problems, American Indians -- numbering 1.4 million in the 1980 census and probably about 1.6 million today -- are in far worse health than the rest of the population, dying earlier and more afflicted by alcoholism, accidents, diabetes and pneumonia.

And while more than half of all American Indians live in cities and suburbs, more than 300,000 still live on reservations -- including 100,000 on the giant Navajo reservation in Arizona, New Mexico and Utah.

While focusing on health problems, the OTA report sketched an overall picture of Indian life. The 1.4 million in 1980 included about 60,000 Eskimos and Aleuts, according to census figures. Half lived in the western states and more than one quarter lived in the South. The largest populations were in California (201,489), Oklahoma (169,459), Arizona (152,735), New Mexico (107,481) and North Carolina (64,652).

The report said increasing numbers of Indians live in urban areas, with 22 percent residing in central cities, 32 percent in suburbs and 46 percent in rural areas. Los Angeles-Long Beach was the metropolitan area with the most Indians, 48,120, followed by Tulsa (38,489), Oklahoma City (24,752), Phoenix (22,903), Albuquerque (20,788) and San Francisco-Oakland (18,136).

Just over one-third of all Indians lived on reservations, tribal lands or other identified Indian areas. The largest and most populous, the Navajo reservation, had 104,978 Indians in an area of the Southwest about as large as Connecticut, Rhode Island and Massachusetts. South Dakota's Pine Ridge reservation, the second largest and second most populous, had 11,946 Indians. The census counted 278 reservations and 209 native Alaskan villages.

Except for Aleuts, Indians generally were much poorer than other Americans. In 1979, when median income for all U.S. families was $19,917, the figure for Indian families was $13,678, and for Eskimos, $13,829. But for Aleuts, who benefited from the Alaska native claims settlement, it was $20,313, somewhat over the national average. Among Indian families, those on reservations were by far the poorest, with a median income of $9,924.

In 1980, when 12.4 percent of all Americans had incomes below the official poverty line, the figure was 27.5 percent for Indians, 28.8 percent for Eskimos and 19.5 percent for Aleuts.

At that time, Indian unemployment rates were about double those of the entire population. The proportion of families maintained by a woman without a husband present was 50 percent higher than for the nation as a whole.

As in other sectors of the population, lower Indian income is linked to poorer health. Using statistics for the two-thirds of American Indians served directly by the Indian Health Service, the report said that the "most significant indicator of Indian health problems is the fact that Indians do not live as long as other U.S. populations."

In 1982, 37 percent of Indian deaths occurred among people under age 45; the comparable figure for the entire population was 12 percent. Death rates for Indians in 1980-82 were 140 percent of those for the population generally.

"Alcohol abuse is implicated in Indian death and illness from many causes," the report said. The death rate from liver disease and cirrhosis was extremely high -- more than four times that of the entire population. The death rate from accidents was more than three times as high.

Similarly, the tuberculosis death rate was seven times as high, and death rates also were high for diabetes, pneumonia, homicide and suicide.

Although the Indian Health Service maintains some units in urban areas, it provides comprehensive care only on or near reservations.

In 1984 the IHS physician-to-population ratio was 0.7 per 1,000 persons, less than half that for the United States as a whole, and about three-quarters of the rate for nonmetropolitan areas.

The report said that loose definitions of eligibility for medical care, together with a high rate of population growth, soon will present a major health care problem.

The Indian Health Service Improvement Act expired two years ago, and a long-running dispute between Congress and the administration prevented its extension. At issue is how much direction Congress should give the administration on running the IHS; the administration is resisting efforts to force the IHS to provide more services in urban areas and to train personnel.

Underlying the dispute is money. In the long run, the report said, citing the quarter-blood requirement then rumored and now formally proposed, the government must decide whether to provide a full range of medical services for all Indians on or near reservations, or to reduce its commitment.