When M. Danny Wall, majority staff director of the Senate Banking Committee sat down to address the National Savings and Loan League this week, he was well prepared for the first question: Is housing still a high national priority?

"I get asked that question three times a day in this town," said Wall, who like his boss, Republican Sen. Jake Garn, hails from Utah. s

Mincing no words, he told his audience that housing no longer enjoys the economic and political popularity it did under previous administrations. Indeed, President Reagan's proposed budget cuts the number of subsidized housing units this year from 160,000 to 225,000. By 1986 that will mean a savings of $371 million will be saved if rehabilitation loan programs are slashed.

Wall, who was joined by House Banking subcommittee staff director Gerald R. McMurray, painted a picture of a diminishing government role in housing during the 1980s. The number of subsidy programs like Ginnie Mae and Sections 235 and 8 will be reduced because they are not suitable in a period of sustained high interest rates. Moreover, after 30 years public sentiment is shifting against subsidies, they added.

"We won't rush to assist housing as in the past," said McMurray. "There will be very little direct congressional relief for the housing industry."

The only form of "relief" being suggested for the beleagured savings and loan industry, which originates almost half of the country's mortgages, is increased tax exemptions or deferrals for interest income on savings. Wall said yesterday he expected the limit would rise form the present $200 for individuals and $400 for couples to $1,000 and $2,000 or even $2,000 and $4,000 in the next 18 months.

No interest tax exemptions were contained in the first Reagan proposals, and Treasury Secretary Donald Regan last week expresed doubt about their inclusion in the second set of proposals. Nevertheless, the concept enjoys considerable support on the Hill, judging from the number of bills that have been introduced to eliminate or defer taxes on a portion of interest on savings. Some of those will be aired at a hearing today before the Senate Finance subcommittee on savings, pensions and investment policy.

While the agrument continues in this town among such economists like Alan Greenspan as to whether housing already claims too big a share of the credit market, a related argument exists over whether deductions for interest income would spur saving or just more consumption. The portion of income Americans saved reached its all-time low of 4.6 percent last month.

Recent studies done for the insurance and thrift industries on increasing the amount and eligibility of the Individual Retirement Account program claim various plans could mean savings of between $11 billion and $21 billion the first year. The bulk of these funds would be deposited in thrift institutions, thus helping to assure the supply and stability of funds for mortgages.

Savings institutions experienced their worst year ever in 1980, but 1981 is expected to be worse, according to the National League's chief economist Dale Riordan. During the first six months of this year he estimates savings and loans may experience a loss of 20 cents to 40 cents on every $100.