President Reagan yesterday urged Congress to approve $36 million in new assistance to the Nicaraguan contras, saying that the leftist Sandinista government they oppose has so far instituted only "extremely limited" reforms.

In his weekly radio address, broadcast from the Oval Office, Reagan reiterated that only $3.6 million of the $36 million package would be earmarked for lethal supplies, such as guns and ammunition, and said he would agree to withhold that money from the contras for a month to give the peace plan more time to succeed.

In the Democratic response, Rep. Richard A. Gephardt (Mo.), a presidential candidate, said that since 1981, "this country has committed more than $200 million to overthrowing the government of a nation of less then 4 million people. The contra war is wrong -- it is clear that it cannot be won -- and the administration's only answer to this failure is more of the same.

"The truth is -- the administration did not seek the present negotiations," Gephardt said. "The peace process was not created by the president of the United States, but by the president of Costa Rica. And in accepting the Nobel Peace Prize, President {Oscar} Arias told the world that President Reagan 'knows very well that the contras are the problem and not the solution.' "

Reagan said the growth of democracies in the Western Hemisphere has been "one of the great stories of this decade." He said that only half the people in this region lived under democratic systems when he took office in 1981 and that roughly 90 percent of the people do now.

But Reagan said the Sandinista government headed by President Daniel Ortega has gone the other way.

"In the face of this broad, sweeping movement," he said, "one country, Nicaragua, has gone in the opposite direction, away from freedom and toward repression."