Washington area apartment owners and condominium developers are joining the Reagan administration in a growing campaign to defeat major provisions of an antidiscrimination in housing bill that is being considered in the Senate and House.

Industry opponents predict there will be sharp rent increases and greater insurance liability risks under the legislation, which would extend the protection of the 1968 Fair Housing Act to the mentally and physically handicapped and to families with children.

Most also object to the change that many housing advocates believe is the most important element in the bill, which gives Department of Housing and Urban Development administrative law judges the power to decide housing discrimination cases. Such cases are now decided in federal and state courts.

Donald R. Slatton, executive vice president of the Washington area Apartment and Office Building Association, said the expense of building apartment units of "adaptive design" for handicapped residents would unfairly burden owners and builders. He and others also said increased insurance costs would be the result if units have to be rented to potentially violent mentally handicapped persons and to families with children who want units in buildings not designed for them, such as high-rise structures with balconies.

Slatton's organization represents the owners of about 200,000 apartments, or about 80 percent of all units in the Washington area.

A Senate Judiciary Committee aide said these are "bogus" objections, and that the bill would not require landlords to accept handicapped tenants "if their conduct makes them unworthy." Several other supporters said claims of higher costs and unfair enforcement measures are unfounded.

"This is an excellent bill," the best "in 10 years of efforts to strengthen fair housing laws," said Martin E. Sloane, executive vice president of the National Committee Against Discrimination in Housing.

The bill was introduced early this year by Sen. Edward M. Kennedy (D-Mass.) and Sen. Joseph R. Biden Jr. (D-Del.), chairman of the Judiciary Committee. It is a strengthened version of legislation Kennedy and others have sponsored since 1979.

With the Democrats in control of the Senate, the bill's supporters believe its chances of passage are good for the first time in six years. The Judiciary Committee is expected to consider the bill after the August recess.

The House version of the legislation is awaiting action by the housing subcommittee of the Banking, Finance and Urban Affairs Committee.

Under the present fair housing law, HUD can only conciliate discrimination disputes. As a result, only about one of every five discrimination complaints the department receives each year is resolved. When conciliation fails, persons who have made complaints must drop their case or file their own lawsuits.

The administration has agreed there is a need for stronger enforcement powers, but had proposed that complaints be handled by arbitrators rather than administrative law judges. The Justice Department recently issued an opinion, however, saying that both methods are unconstitutional. As a result, administration officials are revising their proposed fair housing legislation, according to Michael Dorsey, HUD general counsel.

"We believe we can design a process {using arbitrators} that gets around the constitutional problem," Dorsey said.

The opinion issued by the Justice Department "is a disingenuous and tortuous legal argument cooked up for the sole purpose" of opposing the legislation, the Judiciary Committee aide said.

"Housing discrimination is a very serious matter and we believe {legal cases} should be handled in the judicial system," Slatton said.

Administrative law judges are HUD employes, who would be empowered to impose fines up to $50,000 for the first offense and $100,000 for the second. "Those are big bucks and I would want the best judge" possible, Slatton said. The law judges' decisions could be appealed to federal courts.

Other sections of the proposed legislation would require builders to design new buildings with doors wide enough for wheel chairs, make public-use areas accessible to handicapped persons and equip all apartments with "basic universal features of adaptive design."

The legislation also would prohibit discrimination against families with children under 18, but exempts retirement residences designed to meet the physical and social needs of men and women over 55.

G.V. (Mike) Brenneman, whose company has developed and marketed several thousand rental and condominium apartments in the Washington area, said the cost of making all units "adaptive" for handicapped residents would be "absolutely astronomical." The legislation is an "overreaction" to a need for change, and the law's framers "have gone too far," he said.

The Senate aide said additional expense in new buildings would be less than 1 percent of the construction cost. He said he based the estimate on a 1979 HUD study of building costs for units built to standards "more rigorous" than those envisioned by the current legislation.

The legislation would cover only multifamily rental buildings with elevators, although Senate sponsors plan to try to amend this portion of the bill to cover condominiums as well.

The ban on discrimination against families with children is one of the most controversial aspects of the proposed legislation, according to HUD general counsel Dorsey and apartment building operators.

The administration feels this measure "is so controversial" that it should be dealt with in separate legislation, Dorsey said.

In addition, he said, "Our experience has been that discrimination complaints based on family status can also be resolved on the basis of racial or sexual" bias.

Adult-only complexes are "a significant market" for many owners and should not be banned, Slatton said. "People whose families are grown and don't want to live next door to children" should be able to find apartments.

In addition, high-rise buildings with balconies, swimming pools and no play areas could pose dangers for children and generate lawsuits against landlords, he said.

Discrimination against children, however, is more pervasive than generally believed and affects disproportionate numbers of poor and minority families, supporters of the legislation said.

A 1980 HUD study showed that 75 percent of all rental units in the nation excluded children or imposed restrictions on renting to families, according to James B. Morales, a staff attorney with the National Youth Law Center in San Francisco.

A 1985 study reported that 9 percent of the rental units in Alexandria accepted children without restrictions.

The remaining 91 percent barred children altogether or placed limits on age and number of children in a family or had other conditions.

Sixteen states, including Virginia, plus the District of Columbia, prohibit discrimination against children but many have such "big loopholes that without meaningful federal legislation the state laws become meaningless and impossible to support," said Thomas Shellabarger of the U.S. Catholic Conference.