New Zealand's prime minister denies that knighthood marks sunset of his career

When New Zealand Prime Minister Robert Muldoon visits Washington next month for talks with President Reagan, he will be bearing a new title: Knight Grand Cross of The Most Distinguished Order of St. Michael and St. George.

The award - which gives him use of the title ''Sir'' before his name - caused a stir when it was announced in Queen Elizabeth II's traditional New Year honors list. (She is also Queen of New Zealand, although this country has not been a British colony since 1907.)

New Zealand prime ministers have usually been knighted after they have left office. Only one other prime minister was so honored while still in office: Keith Holyoake, in 1970. Political commentators were quick to point out that Sir Keith resigned shortly thereafter.

What raised eyebrows here is that 1984 is an election year, and Mr. Muldoon, who has led his conservative National Party to victory in the last three elections, is under considerable pressure from within the party. Commentators wondered aloud whether the knighthood meant that he was about to step down - whether the honor was a payoff from dissident colleagues who were about to force his retirement because they were unhappy with his unorthodox economic policies.

Noting that Muldoon's own government had initially recommended the honor and that the Queen had only approved it, the leader of the opposition Labor Party, David Lange, said: ''For the government to recommend its head for a knighthood at the beginning of an election year can be seen as a means of bolstering a sagging political reputation.''

Muldoon, prime minister since 1975, was quick to reject speculation about his future. ''If anyone thought it was a signal of an early retirement, it is not,'' he said.

He dubbed Lange's accusation that the government was using the honors system for political purposes as not worthy of comment. But he said he had not recommended himself for a knighthood. He claimed to know who had recommended him , but would not say. Sources here said the recommendation to the Queen probably came from one of Muldoon's senior Cabinet colleagues.

With much of the country on vacation in the Southern Hemisphere's midsummer, there has been little public reaction to the award. But newspaper editorials have generally hailed it as well deserved.

They have noted that only four New Zealand prime ministers have served for longer periods in office, and that Muldoon, a chartered accountant, was minister of finance for five years before becoming prime minister. He has retained that vital position since 1975, and is therefore the longest-serving finance minister in the British Commonwealth.

Muldoon confesses to be ''gratified'' by the honor. While other British Commonwealth countries, like Canada and Australia, have moved away from the traditional honors system, Muldoon, his party, and New Zealand in general see it as an important link with the crown, he said.

But Sir Robert, a pugnacious politician who claims a special affinity with the ordinary working person, says the title won't change him: ''My signature will still be exactly the same - Rob Muldoon.''

He underlined this by posing for a knighthood photograph, walking barefoot with his wife Thea along the beach at his vacation home near Auckland. With the award, the prime minister's wife becomes Lady Muldoon.