Has the Reagan administration given up on its efforts to make big government smaller and more responsible?

Or does it really think it can accomplish those objectives without encouraging government workers to blow the whistle on waste, fraud, and mismanagement throughout the federal establishment?In any event, this important cause sustained some serious damage from one of its best friends this week when President Reagan decided to veto a new bill thatwould have improved protections for government whistleblowers.

The damage is compounded by the fact that the veto puts the White House at odds with all members of Congress, including Mr. Reagan's staunchest supporters, and with private industry - and by the fact that the excuses for the veto don't hold water.

What's more, the veto inflicted some needless wounds in that it came after four years of intense negotiations in which congressional leaders thought they hadachieved a compromise acceptable to the administration.

In essence, the bill would have taken the Office of Special Counsel away fromthe Merit Systems Protection Board and made it an independent agency. Moreover, the measure would have more clearly defined the role of the OSC as that of protecting whistle blowers.

As it is now, the special counsel is often in the position of attacking federal workers who expose waste and fraud, using information gathered in investigations against the whistle blowers.

The White House insists that the proposed new provisions would interfere withthe legitimate discipline of employees and put one part of the executive branch of government in the awkward position of arguing in court against another part of the same branch.

But there's legal precedent for federal agencies to challenge executive branch decisions. What's more, the bill would have provided standards for protecting whistleblowers that are now in use in private industry. Those standards haven't interfered with private business' ability to fire incompetent workers.

No wonder that either the House or the Senate has approved this bill unanimously on four different occasions.

Despite this week's veto, the whistleblower protection bill still makes sense. The measure should be re-introduced next January when there will be a new Congress and a new occupant in the Oval Office to consider it.