White House chief of staff Donald T. Regan has scrapped a plan by Surgeon General C. Everett Koop to testify before Congress this week in favor of legislation that would ban all advertising of tobacco products, administration officials said yesterday.

Koop had submitted his planned testimony to the Office of Management and Budget for approval, officials said. But Regan angrily objected at yesterday's White House staff meeting, and officials said the budget office has also withheld approval of Koop's remarks on grounds that the legislation has implications beyond health issues.

Administration officials, who refused to be identified by name, quoted Regan as saying that a decision on the legislation should be made by the White House and not by Koop. Regan also objected to the legislation on its merits, officials said.

The officials noted that OMB Director James C. Miller III testified against a ban on cigarette advertising when he was chairman of the Federal Trade Commission.

The advertising and tobacco industries are preparing for a major battle over the legislation, introduced last month by Rep. Mike Synar (D-Okla.), which would ban all promotion and advertising of tobacco products, in newspapers and magazines, on billboards and as part of sales displays.

An FTC report to Congress released yesterday estimates that more than $2 billion a year was spent on such advertising in 1984, congressional aides said.

The issue of tobacco advertising is to be the subject of hearings scheduled to begin Friday before the House health and environment subcommittee chaired by Rep. Henry A. Waxman (D-Calif.). In addition to Koop, the subcommittee expects testimony from the American Medical Association, which has recommended the measure.

Koop has long been outspoken on the health hazards of smoking, and has called for "a smoke-free society" by the year 2000.

He has said that cigarette advertising is a major contributor to smoking among youth, and, in an interview on CBS' "Face the Nation" last December, said, "If I had my way, I would certainly ban advertising. The experience of countries where advertising bans have been enforced has shown a tremendous drop in smoking."

Koop refused comment yesterday. It remained unclear whether he would appear Friday before the Waxman panel.

A senior administration official said Koop was planning to tell the Waxman panel that a ban on advertising is a "good idea," but that his testimony stopped short of saying that he was speaking on behalf of the president. In the past, the administration has refused to endorse such legislation, congressional aides said.

The senior official said that Koop was taking a "narrow focus" on the health aspect of the advertising ban, but that administration officials had broader concerns. These included questions about individual rights and the First Amendment.

"Abolishing the advertising of tobacco is not the administration's position," the official said.

The Supreme Court ruled July 1 that Puerto Rico did not violate the Constitution by forbidding gambling casinos to publish advertisements aimed at residents. Synar has said the ruling shows that a ban on tobacco promotion can "pass muster under the Constitution." The official said the administration was studying the ruling.

Tobacco and advertising representatives have said the proposed ban would not pass the constitutional tests laid down by the court.