Democrats on the Senate Finance Committee yesterday followed their House counterparts and agreed to seek repeal of a cherished and controversial tax break long employed by defense and construction contractors.

The move, made as Democrats on both congressional tax-writing committees head toward completion of multibillion-dollar tax packages intended to help reduce the budget deficit, enhanced the already pronounced Democratic flavor of the tax deliberations.

Republicans on both the House Ways and Means Committee and the Senate Finance Committee are boycotting the closed-door drafting sessions, generally arguing that the deficit should be reduced more through spending cuts than tax increases.

Ways and Means Democrats, who Tuesday approved a more than $12 billion package of new taxes that includes the provision aimed at defense and construction contractors, yesterday completed a set of technical changes in last year's tax-revision law and some miscellaneous tax measures.

Final action by the Democrats on the panel was postponed late last night. Committee Chairman Dan Rostenkowski (D-Ill.) spent the day huddled in meetings with members seeking technical changes for constituent interests.

One technical change would repeal a provision of last year's law that increased taxes on authors and photographers. The provision, the subject of heavy lobbying by well-known writers, requires authors to deduct the expenses of writing a book over several years rather in the year the expenses are incurred. A repeal effort also is expected in the Senate.

The proposed repeal of the so-called completed contract method of accounting, which has allowed defense contractors to delay payment of taxes on contract profits for years, would raise $800 million in revenue in fiscal 1988. It would complete the partial repeal of the accounting method that was included in last year's tax-revision law and was bitterly opposed by some Republican senators.

Yesterday's action, which also includes a change in the way diesel-fuel taxes are collected, brought Senate tax writers to within $1 billion of the $9.5 billion they hope to find in higher taxes for 1988. They are shooting for a smaller tax package than Ways and Means Democrats fashioned because Senate Democrats are including in the revenue package $2 billion they expect to gain from stiffer enforcement of tax laws. Senators also reached putative agreement on $1.5 billion in spending cuts in programs that fall under the Finance Committee's jurisdiction, principally Medicare.

Senate Finance Comittee Chairman Lloyd Bentsen (D-Tex.) said yesterday that Democrats on his panel may adopt controversial limits on home-equity loans that were accepted Tuesday by Ways and Means Democrats. In the Ways and Means package, interest could be deducted only on the portion of a home mortgage below $1 million and on the portion of a home-equity loan below $100,000. The plan also would end interest deductions on loans used to buy boats or mobile homes that are not primary residences.

The restrictions would replace current limits on home-equity loans included in the tax-revision law that President Reagan signed almost exactly one year ago.

Coupled with tax crackdowns on corporate takeovers, inheritors of large estates and tax-favored partnerships, the defense and mortgage provisions are part of a bill that only hits the wealthy, Ways and Means Democrats claimed.

"This bill comes out of the hide of the Wall Street czars, the {Ivan} Boeskys, the $5 million estates. How many Democrats are in that category?" asked Rep. Fortney H. (Pete) Stark (D-Calif.). "It's very difficult to say we've focused on anybody but the super-rich and large corporations."

The groups that would pay higher taxes or lose business as a result of the tax measure, however, spent yesterday gearing up to lobby against the plan, which is scheduled to be voted on by the full Ways and Means panel today and by the complete Finance Committee on Friday.

Real estate agents, lenders, homebuilders and other real-estate-related groups are organizing to oppose the mortgage and home- equity provisions of the tax plan and plan to make the case that something that was changed so recently should not be altered.

"Now they're going to revisit tax reform and say, 'We were only kidding, folks?' I can't believe they're sure what they're doing," said Gary J. Perkinson, a lobbyist who is coordinator for Save Home Equity Deductions, a multi-industry coalition.