Baseball Commissioner Bowie Kuhn blocked the deal yesterday that would have sent pitcher Vida Blue from the Oakland A's to the Cincinnati Reds, but urged the two clubs to try to settle on a more acceptable pact.

Kuhn did not say what might be a more palatable agreement, but declared the one made in December between Reds' president Bob Howsam and A's owner Charles C. Finley to be "not in the best interest of baseball."

Kuhn said he was confident the two clubs could renegotiate a deal for Blue during the interleague trading period beginning next month. He also said he would not penalize the clubs for failing to clear the deal through him first, as he had requested clubs to do when large cash payments were involved.

The Reds were prepared to give the A's $1.75 million in cash and minor league infielder Dave Revering in return for Blue, a three-time 20-game winner who is the last vestige of one of baseball's most colorful and successful championship teams.

It was the second time in 19 months that Kuhn has canceled Finley's attempts to peddle Blue. In June, 1976, Kuhn killed the $3.5 million sale of three Oakland players, including Blue, who was to go to the New York Yankees for $1.5 million.

Finley sued Kuhn, but lost when a federal judge upheld the commissioner's broad powers to act in the sport's best interests.

Kuhn, who was in Boston yesterday, told reporters via a telephone press conference, "I hope good sense will prevail here and they (the two clubs) will try to work something else out so we won't have that problem (lawsuits) again."

Finley told UPI, "It doesn't surprise me. I'm not saying what I'm going to

The Reds issued a statement saying they would have no comment until they could study Kuhn's 15-page decision. The decision was the result of two six-hour hearings Kuhn conducted this month.

Kuhn's statement said, in part: "I am passing only on the proposed assignment. I am not saying I will disapprove an assignment of Blue underall circumstances. Quite the contrary, I urge the Oakland and Cincinnati clubs to review the situation carefully to see if they cannot find some way to structure a deal which will not present the concerns which I see in the presently proposed assignment."

Referring to testimony Finley gave during the hearings. Kuhn said he was sympathetic to the A's financial plight. He also noted that Finley would give no guarantee that any portion of the $1.75 million would be used on player development.

Stressing the need for "competitive balance," Kuhn noted that the Reds are already one of the strongest clubs in the National League West Divison and would be further strengthened by the addition of Blue.

"The proposed assignment would also worsen the competitive position of the Oakland club by making this weak team even weaker," Kuhn's statement said of the A's, a club decimated by Finley's deals to acquire cash and the loss of players in the free-agent re-entry draft.

Kuhn was asked several times about reports he has set an informal maximum of $400,000 cash in player deals, but the commissioner said there was no se figure.

Following the controversy swirling around Finley's attempted 1976 deals for $3.5 million. Kuhn put club owners on notice last February that he would scrutinize every deal involving large cash sums in which there were no player-for-player swaps. He urged that he be contacted before any such proposed deals were made.

Shortly after that warning, Finley sold Paul Lindblad to the Texas Rangers for $400,000 in a deal Kuhn finally approved. Many in baseball inferred that figure was the limit Kuhn found acceptable.