I am an Indian citizen residing in Malaysia on an employment visa. I received a multiple entry Schengen visa, valid for two months, to attend a conference in Vienna from the Austrian Embassy. My return ticket is from Kuala Lumpur to Paris. Once in Paris I intend to use the Euro rail for travel in Europe until i attend my conference in Vienna at the end of my trip. Since i have time before this conference, I thought of going to London to attend another conference. However when i applied for the Schengen visa to the Austrian Embassy, I did not mention this, and my itinerary showed that I would be within Schengen area for all the 15 days of my stay. Would it be ok to change my itinerary to Paris-London-Paris-Vienna instead of Paris-Italy-Vienna, within the validity period of my Schengen visa which is multiple entry ?
It means another exit/entry so it could be an issue if you had a single-entry visa. But with a multiple-entry visa, it should be fine.
For more on changing your plans after you received a Schengen visa, you can have a look at Change of plans in Schengen visa and the links therein.
Regarding the UK visa you will also have to obtain, see Where can a tourist apply for a UK Visitor (standard) Visa? and UK Tourist Visa for Indian Citizens from Paris
The UK is not part of the Schengen area; you'll need to obtain a separate visa for the UK if you plan to attend a conference there.
Therefore, changing your itinerary has no impact on your Schengen visa as it is not valid for the UK.
Note that you should apply for the UK visa from Malaysia and not plan on applying for it from the UK Embassy in France.