The Republican and Democratic party chairmen yesterday urged an increase in public funding for the coming presidential transition, but differed with the administration over when transition planning funds should be made available.

Republican National Committee Chairman Frank J. Fahrenkopf Jr. called proposals to increase funding from $2 million to $3.5 million for post-election planning an "appropriately restrained increase." The $2 million figure hasn't been increased since 1976.

At Senate hearings yesterday, Democratic National Committee Chairman Paul G. Kirk Jr. called the proposed Presidential Transition Effectiveness Act by Sen. John Glenn (D-Ohio) "a step in the right direction."

But Budget Director James C. Miller III attacked efforts to allow reimbursement of up to $200,000 in costs associated with transition planning before the election.

"I agree we might give attention to pre-election planning," he said, "but I don't believe it should be publicly financed."

One reason, he said, is that half the money would be spent planning a transition that would never occur.

Harrison Wellford, a transition adviser to Jimmy Carter, applauded efforts to place pre-election transition planning in the hands of the national party committees to provide "insulation" that might reduce misunderstanding and jealousy between campaign and planning staffs.

Sheldon S. Cohen, a member of the Center for Excellence in Government, secretary of the National Academy of Public Administration and former commissioner of internal revenue, said, "During the campaign, no one who is close to the candidate in a close election will spend five minutes thinking who ought to be appointed to important jobs or what should be done about a law that expires Jan. 25."

Wellford called transitions a time of "great peril and risk" and he praised the bill's requirements for public disclosure of contributions, workers and expenditures. "You don't want to leave a lot of easy money flowing into an untested system," he said.

"The use of private contributions for the costs of presidential transitions without public disclosure creates the potential for hidden conflicts of interest," Glenn said.

He said President-elect Reagan had more than 1,000 people working on his transition and raised more than $1.25 million from anonymous donors to augment public funds.

Four years earlier, Carter had raised $150,000. In 1968, Richard M. Nixon raised $1 million.

Records of Reagan's private Presidential Transition Foundation Inc. were turned over in 1984 to an independent counsel probing the finances of then-White House counselor Edwin Meese III. At that time it was revealed that the funds had paid for parties, tuxedo rental, a parking ticket, hotel bills for Nancy Reagan's decorator and legal fees stemming from former secretary of state Alexander M. Haig Jr.'s confirmation hearings.

Glenn's bill contains no restrictions on what the money could be used for, except that pre-election funds could not go for partisan activities. An aide said that the disclosure provisions should provide a brake on questionable expendures.

Glenn said that giving the national party committees "first crack" at the transition planning activity would create a stronger institutional memory on transitions.