OFFSHORE By Penelope Fitzgerald Henry Holt. 141 pp. $15.95

PENELOPE Fitzgerald's most recent novel, Innocence, was one of the happiest discoveries of this spring. Romantic, urbane and ironic, Innocence alerted American readers to the work of a writer already firmly established in England, with four previous novels and three biographies to her credit. Now we are blest with the publication of Offshore, an earlier novel that won Britain's Booker Prize in 1979. It should bring Penelope Fitzgerald many more admirers.

The brevity of the book -- 141 pages -- may suggest that it is a miniature or a microcosm of something larger, but no diminutives are appropriate. Offshore is a very good novel that is just the size it needs to be. Its compactness suits its nautical venue, Battersea Reach, a stretch of the Thames river near London's Chelsea. Some of Offshore's most active characters are boats and barges, but very few of them are shipshape, and the novel's ambiance is the shabby half-respectability of the barge-owners, who live all year round in their ambiguous craft.

Afloat at high tide, mud-lodged the rest of the time, the barge-dwellers are "creatures neither of firm land nor water." There's something indecisive -- amphibian? -- about them, as if they hadn't made up their minds where or whether to belong to terra firma. Even Richard, the most conventional of them, who could live in style on land, is unaccountably attached to his boat (slyly named Lord Jim). "The river spoke to his dreaming, rather than to his daytime self," and like most of the inhabitants of the Reach, Richard cannot quite pin himself down to one or the other.

They're all settled on their barges because they need the river in some way. Their reasons may be practical ones like convenience or economy or mild desperation: charming Maurice is a male prostitute and a receiver of stolen goods, Nenna's husband has left her and their two young daughters. But everyone in the little "block association" of Battersea Reach also achieves moments of humble lyricism about the Thames, like Willis, who "found it easier to sleep when he could hear the lighters, like iron coffins on Resurrection Day, clashing each other at their moorings at night, and behind that the whisper of shoal water." This is, after all, the river beloved by Dickens, Turner and Whistler, and their implicit presence is eloquent.

There are landlubbers in Offshore. Laura, the wife of the impeccable Richard, is one: she can't wait for Country Life to arrive each month so that she can turn to the property advertisements and dream of quitting Lord Jim for "a lawn, and a cedar tree on it with a shadow, and a squarish house in the background to show the purpose of the lawn." But the real conflict of the book is between Nenna and her absent husband, Edward. Rather than join his wife and children on their ramshackle barge Grace, Edward lives in lodgings at the farthest end of London, in what Nenna thinks of as the "abyss of respectability." Will their equivocal marriage survive, in all its stubborn inertia? Their indecisive attempts at reconciliation provide two magnificently bittersweet, serio-comic encounters, in which woolly crossed purposes and recalcitrant surroundings attain a mad urgency, funny and ominous at the same time.

SOME OF THE best scenes emanate from Nenna's children. Martha, in early adolescence, has already reached and passed "the crucial moment when children realize that their parents are younger than they are." Martha, neither as indecisive nor as feckless as her parents, would like a normal father and mother who "live together in some ordinary kind of house so that I can come and say, how can you expect me to live here!" Martha's sexuality shyly emerges: her friendship with a courtly German boy who wants to see "Swinging London" is sturdy and tender.

But it's 6-year-old Tilda who steals most scenes. Tilda knows enough about the river to qualify for a pilot's license. She can chant the day's tides or "read" the various messages of ships' flags; she knows the tonnage of every passing vessel. She's an expert mudlark who goes scavenging at low tide for old tiles to sell to Chelsea antique dealers (and when a dealer offers her an antique toy instead of cash, Tilda sniffs "I hate very old toys. They may have been all right for very old children."). One of the loveliest scenes in Offshore finds Tilda at the top of Grace's mainmast, watching for the enchanted moment when the tide turns. She dare not blink, lest she miss the mysterious few seconds when the Thames swings round again to the sea. Tilda, precociously literate, is the secret heroine of fragments of Victorian fiction which she improvises in her head. In hands less expert than Fitzgerald's, Tilda might be repulsively cute, but she's a serious character, just right for the economy of Offshore.

Penelope Fitzgerald would be worth reading for her aphorisms alone -- all the pungency of years of experience concentrated into a casual axiom. ("Nenna was thirty-two, an age by which if a blonde woman's hair hasn't turned dark, it never will.") Though her comic gifts are dazzling, the beauty of Offshore lies in a structure shaped by artful omission: the novelistic equivalent, perhaps, of a Turner watercolor, whose art works quickly to merge the impressionistic and the essential. Nothing suffers, for the omissions are banality, artificiality and cuteness of all sorts. As this perfectly balanced novel hurtles to its surprising end, one feels the momentum of a noble engine. I can't wait to read the rest of Penelope Fitzgerald's works.

Frances Taliaferro teaches at The Brearley School in New York.