CHILDREN OF LIGHT. By Robert Stone. Knopf. 258 pp. $17.95.

THE DIFFERENCE between illusion and delusion is in part the difference between making the dream or being its victim. Gordon Walker, the hero of Robert Stone's excellent fourth novel, Children of Light, is in pursuit of a better dream. The old ones are all torn and need to be patched together with alcohol and drugs. He seeks the dream that will quiet his internal voice which tells him his life is "trash -- a soiled article, past repair."

Walker is a dream-maker. For 17 years, he has worked in the film industry as an actor and script writer. He knows all the tricks and he's good at them. But none of his skills amounts to much. The days behind him are just "a litter of pictures." As an old friend tells him, "I can't for the life of me remember the things you did."

The novel begins with Walker waking up next to a beautiful woman in L.A. Within a few minutes he drinks vodka, takes Valium and snorts cocaine to prepare for the day ahead. He feels on the edge of death and needs to conceal from himself the failure of his life. His wife has left him, his sons are grown and falling apart. He decides to drive down to Bahia Honda in Baja California where a script that he wrote is being filmed, an adaptation of Kate Chopin's novel The Awakening.

The lead actress is Lee Verger (n,ee Lu Anne Bourgeois), an old friend of Walker's, who has something he wants. Not love or sex or good times, but delusion. Lee Verger is mad, or rather she has a delicate psychology that needs to be sustained by lithium, which she stops taking in order to act. Without lithium she succumbs to her hallucinations of the Long Friends, tall, diaphanous creatures with dragon-fly wings and lavender-sachet breath who whisper to her in Creole about "things that must never be known, ruinous scandals, undetected crimes."

Walker's curse is a kind of self-knowledge that lets him see through all the illusions, even though this is no help to him. He believes in nothing and hopes that Lee Verger can save him. We as readers know his hope is ill-placed. The two have, as the director says, "no survival skills." Everyone warns Walker. He is not welcome at the film location and we have seen Lee Verger brooding about her Long Friends. Walker thinks he is in love with her but in truth, he is the assassin who will destroy her.

There is a Faustian quality to Walker. He'd been successful in the glitter world of Hollywood and he sold whatever real ability he had for the immediate rewards he found there. But as his friend the drug doctor says, "One can't give in too much to immediate reward, you know. You lose something, eh? Have to pay off on one end or another."

The novel is jampacked with people pretending to be other than they are, people with masks, people who have become their lies. Even the film location, Mexico pretending to be Louisiana, is schizoid. The only sane person is the mad one, Lee Verger, who tells Walker, "The girls get shriveled and the boys get soft and sentimental. That's how the damn world goes . . . What do you want from me, fool? You want us to be kids again?"

Walker seems determined on self-destruction, yet the novel is not mired in its own bleakness. In an interview with Charles Ruas, Stone recently said, "I want to share that sense of the terrifying nature of things with my hypothetical reader and, as a result of our sharing it, produce a positive experience that gives rise to hope and transcendence. That's what I'm trying to do."

AND IN Children of Light that is what he has done. Stone is an amazingly deft novelist who writes with great fluidity as he moves from exact dialogue to interior commentary to precise description. He never uses a wrong word or even a weak one. In describing the harbor at St. Epifanio Beach, Stone writes, "A stiff wind from the bay rattled the wire rigging of the boats at moor, banging stays against masts in a ceaseless tintinnabulation." The language seems always effortless and full of grace. Together these skills have made Stone one of our best writers.

This is just as well because too often Children of Light skirts the edge of being a "Hollywood" novel, lingering perhaps too long on the show biz personalities as if they were interesting for their own sakes, instead of being metaphors of our time: cynics, consumers, non-believers, frauds. Yet when these characters work best, Stone seems to be saying we as a nation have traded the dream of a better world for the illusion that keeps us from thinking of any world. Even the director's wife yearns for the 1960s when life seemed to mean something: "Everybody shoplifted . . . People handed out flowers. You could get laid three ties a day with an ugly body."

Brilliant and wonderful in its parts, the novel occasionally gets lost as it moves through a landscape of anecdote and colorful personalities, perhaps because ultimately the glitter world that Stone describes is a foolish and self- indulgent place. What pulls the novel back is the haunting and beautiful Lee Verger, victim of her dream or delusion and yet who transcends it.

In the end, Lee Verger tries to rescue Walker by taking him with her into her delusion, created in part from Walker's screenplay. She calls out to him, "Come . . . or else save me." But Walker does neither. It's too late. He holds back in order to survive, to live not in the light but in the shadow-land. He simply drifts away.