THIS SIGNIFICANT BOOK acquired a new timeliness when on May 17 the Catholic bishops of Nicaragua told the six priests serving in the executive branch of the new government of that nation that they must make plans to turn over their jobs to lay people. That directive appears to be contrary to the demand for social justice issued by Latin America's bishops at Medellin, Colombia, in 1968 and again at Puebla, Mexico, in 1979.

Penny Lernoux, a skilled reporter based in Bogota, underlines the crucial role of the Catholic Church in Latin America because "the Church has provided moral legitimacy for authority in Latin America ever since the Conquest." Until very recently, that legitimacy was conferred on authoritarian and frequently military governments. For almost a generation now, an insurgent militant minority of Catholic leaders -- especially priests and nuns -- have rejected the idea that social change can come about by educating children of the wealthy. The Mexican Jesuits, Lernoux notes, have "closed their upper-class schools . . . to devote themselves to educational programs in the slums." The Jesuit General, Pedro Arrupe, gave the reason: the Jesuits "have a moral obligation to make up for their sin of omission in failing to seek social justice through the education of the poor."

The author finds enough blame to go around. But she correctly points to the Church as the principal cause for the tyranny that rules the continent. More specifically, she criticizes a "cross-and-sword Christianity [which] places heavy emphasis on rituals and individual piety at the expense of Christian solidarity and a commitment to social and economic justice." This truncated version of Christian faith is, Lernoux points out, "an extremely political concept of religion" since it empowers the military regime to oppress any elements within the Church which, in the state's viewpoint, would undermine national security and encourage that social change which, when convenient, can be called communism.

Lernoux is perhaps more optimistic than some other experts on Latin America. She feels that the commitment to the poor and to human rights made at Puebla represents a "major advancement over Medellin." She notes, for example that the Puebla document criticizes communism but does acknowledge that the fear of Marxism impedes many from facing the oppressive reality of capitalism.

Lernoux feels that the 37 addresses of Pope John Paul II in Latin America added up to a mandate to the peasants to organize and to the Church to intensify its activities on behalf of social justice.

Lernoux is harsh and perhaps a bit shrill in denouncing the Pentagon's efforts in training some 100,000 military officers in 17 nations of Latin America over the last decade. This results, she feels, in U.S. complicity in the police state. The 12,000 U.S. missionaries in Latin America may feel that Lernoux is a bit hysterical over the alleged omnipresence of the CIA. Some watchers of Latin America will sense that Lernoux inaccurately minimizes the presence and the plans of Marxists in Latin America.

But this volume is, nonetheless, probably the most comprehensive account of the Catholic Church's revolt against the military regimes which govern the nations where almost 50 percent of the world's Catholics reside. The outcome of that struggle is very uncertain. It is a struggle, of course, in which the Church has been involved ever since Moses spoke back to Pharoah. In Latin America, the struggle is sometimes called liberation theology -- a concept thoughtfully explored by Lernoux in all of its political and social ramifications.

Lernoux's generally optimistic tone gives us many reasons to hope that by the year 2000 the leaven of the Gospel and the militant efforts of Christians may bring freedom and justice to 350 million people of Latin America, two-thirds of whom are now plagued by poverty, illiteracy and tyranny.

But the removal of priests from government functions -- announced on May 17 for Nicaragua -- is a development not foreseen by Lernoux. If carried out throughout Latin America, it may undercut the reasons for Lernoux's optimism. Indeed, it may be one more major self-inflicted wound in a long series of such mistakes made by the Church over the past 200 years in South America.