Federal officials, buffeted by budget concerns and a continued public outcry, have shelved plans to allow experimental incineration of toxic waste at sea.

The decision by the Environmental Protection Agency this week, officially attributed to belt-tightening, backs the agency away from what it had considered a promising solution to the nation's toxic-waste dilemma.

EPA spokesman Dave Cohen said the EPA will stop work on guidelines for a test of the technology, planned until last year at a site off of New Jersey's coast.

Cohen said that, with the decision, agency officials escaped a "terribly tough position" created by strong opposition from environmentalists, the general public and some members of Congress.

Halting work on the new incineration rules, action that Cohen said will save the EPA about $2 million, must be confirmed by Congress.

Given congressional opposition, lawmakers are unlikely to object to EPA's change in strategy.

Rep. William J. Hughes (D-N.J.), a critic of ocean incineration, said he would be amazed to hear anyone in Congress object.

EPA first looked to ocean incineration in the mid-1970s, seeking an alternative to overused and leaking landfills and to the risks of land-based incinerators.

The agency permitted several "research burns" from late 1974 to 1983 in the Gulf of Mexico, as the technology became commonly used in Europe.

In 1984, after a public meeting that drew 6,000 people in Brownsville, Tex., the EPA backed away from issuing further permits.

The EPA announced tentative approval in 1985 for Chemical Waste Management Inc. of Illinois to burn about 700,000 gallons of carcinogen-laced oil aboard a vessel about 140 miles off Cape May, N.J.

But in May 1986, the EPA said the test would be barred until it could write more stringent regulations. Those rules had been expected soon.