White House chief of staff Donald T. Regan ignited a fresh controversy yesterday over his views about women and administration policy toward South Africa, saying sanctions would hurt the diamond trade and asking, "Are the women of America prepared to give up all their jewelry?"

The remark, made in an interview with reporters Wednesday and published yesterday in the Baltimore Sun, brought sharp criticism from Capitol Hill and elsewhere.

Defending President Reagan's opposition to economic sanctions, Regan said in the interview that South Africa is an important source of minerals and raw materials to the United States.

"We got into sanctions against the Soviet Union on grain because it was the thing to do and we ruined the American farm economy," he said. "Are we going to ruin the American steel industry without knowing it?

"Are the women of America prepared to give up all their jewelry? Are the Israelis, the Belgians, the Netherlands' people prepared not to engage in any more diamond trade? Are we telling ourselves that industrial diamonds -- things that we need for etching, cutting, shaping of tools and so forth -- that we now have to go, if anywhere, to the Soviet Union?"

Rep. William H. Gray III (D-Pa.) said, "A statement that American women prefer diamonds over freedom and human dignity is an appallingly sexist and insensitive statement, and another attempt to justify a bankrupt foreign policy of see no evil, hear no evil, speak no evil about apartheid."

Rep. Mickey Leland (D-Tex.), chairman of the Congressional Black Caucus, said Regan's remark was "not only ignorant but insulting to the compassion and intelligence of American women."

Privately, White House officials acknowledged they were embarrassed by the remark, coming on the eve of a major showdown in Congress over sanctions against South Africa and a planned speech by the president on the issue next week. One White House official said it was "hard to believe he said that."

Regan spoke Wednesday on "background," meaning that he would not be quoted by name, but after the remarks were published, attributed to a "senior White House official," Regan was identified as the official by United Press International. UPI White House correspondent Helen Thomas also quoted Regan as making a similar remark at a state dinner Wednesday evening.

Regan was enmeshed in a similar controversy last November when he said before the Geneva summit that women would be more interested in what Nancy Reagan and Raisa Gorbachev were wearing than about "throw weights" and complex arms control issues.

Chris Matthews, press secretary for House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), said, "This sounds like 'Diamond Don' Regan. According to him, women know nothing about throw weights, only about carats. How many people must die to keep this crowd in diamonds?"