A convicted drug smuggler testified yesterday that Panamanian leader Gen. Manuel Antonio Noriega arranged for him to receive a diplomatic passport, a nearly $2 million line of credit from a bank closely aligned with the government and military protection after Noriega became a "full-scale co- conspirator in my drug operation."

Steven Michael Kalish, a key witness in a Justice Department investigation of Noriega, told a Senate subcommittee that he delivered at least $650,000 in payoffs to Noriega. He said one of the alleged payoffs -- for $250,000 -- was a downpayment on a $4 million bribe Noriega and two Panamanian associates agreed to accept to allow shipment of 400,000 pounds of marijuana through Panama to the United States.

Kalish, whose alleged involvement with Noriega took place between September 1983 and July 1984, testified that Noriega told him he planned to use some of the alleged payoffs to help finance the 1984 presidential campaign of Nicolas Ardito Barletta, who was narrowly elected president in 1984 with Noriega's backing. Barletta was forced out of office in 1985 after Noriega became disenchanted with him.

Kalish said that Noriega also arranged for him to broker a $1.7 million helicopter sale to the Panamanian Defense Forces. Kalish said Noriega, the commander-in-chief of the Panamanian Defense Forces, asked for a kickback on the sale and instructed him to generate the funds by inflating the price.

Allegations linking Noriega, Panama's defacto ruler, to the multibillion-dollar Latin American narcotics trade have existed for more than 15 years. Noriega has repeatedly denied the allegations and has said they are often the product of convicted criminals seeking leniency.

However, congressional officials said yesterday that Kalish's testimony, partly supported by documents, provided a rare public glimpse of the allegations against Noriega and illustrated how the general may be using his vast military and government powers to convert Panama into a safe haven for international drug traffickers.

Kalish, for example, testified that Noriega also assisted a group of notorious Colombian drug kings, known as the Medellin cartel, which U.S. officials believe is responsible for most of the cocaine smuggled into the United States.

Sen. Sam Nunn (D-Ga.), chairman of the Senate Governmental Affairs permanent subcommittee on investigations, said after yesterday's hearing that he had "no reason to disbelieve" Kalish's testimony.

"I hope the Panamanian people take due notice of what happened here today," Nunn said. "In the final analysis, what happens to Gen. Noriega is in the hands of the Panamanian people."

The Reagan administration has been pushing Noriega, who is facing increasing internal opposition, to resign. Nunn said yesterday's testimony on Noriega's alleged drug ties "compounds an already difficult relationship."

Kalish, a 35-year-old high school dropout from the Houston area, said that he frequently loaned a custom Lear Jet to Noriega and other Panamanian officials for trips to the United States and elsewhere.

Kalish said he greeted Noriega after a November 1983 trip that Kalish said Noriega made to the United States in the jet. Noriega told him that he had visited President Reagan in Washington, and that Reagan urged him to liberalize Panama's bank secrecy laws to help U.S. drug investigators. Kalish also said that Noriega told him that Reagan asked the general to help the U.S.-backed contras fighting Nicaragua's Sandinista government.

"Noriega assured me that he would never open up the banks in Panama," Kalish testified.

Kalish said he started selling marijuana to friends at age 15 and eventually helped direct a multimillion-dollar international drug ring. He has been serving an eight-year prison sentence since his arrest in July 1984 and is facing an added sentence of up to 20 years for a 1987 drug conviction in Tampa, Fla.

Kalish said that within a day of arriving in Panama in September 1983, intermediaries introduced him to Noriega. He said he made a $300,000 payment to Noriega in their first meeting.

He said that when he asked Noriega for a guarantee that he would be repaid for the helicopter he sold to the military, Noriega arranged for the National Bank of Panama, which is used by the government, to issue Kalish a nearly $2 million irrevocable line of credit. However, Kalish said, he had not found it necessary to convert the letter to cash because the military has kept up its payments.

Kalish, a fugitive from U.S. authorities when he moved to Panama, said Noriega arranged for him to receive three Panamanian passports, including a diplomatic one. Kalish claims he paid $60,000 for the diplomatic passport to a Noriega associate, Cesar Rodriguez Contreras, a suspected drug pilot murdered in Colombia in 1986.