WHEN JULE STYNE saw the words his "Gypsy" collaborator Stephen Sondheim had written to the song "Small World," he was ecstatic-up to a point.

"No rhyming!" said Styne. "Oh my God, that's great!" But then his gaze alighted on a troublesome passage. Ethel Merman, as Mama Rose, was to sing:

Lucky, you're a man who likes children-

That's an important sign.

Lucky, I'm a woman with children-

Small world, is't it?

I'm a woman with children?

"Jesus Christ!" said Styne. "Sinatra can never sing that song."

"So?" said Sondheim.

It has been that way through all 35 years of Jule Styne's musical-comedy-writing career-the years recalled in Theodore Taylor's new biography "Jule," and the years Styne himself is combing, in song and story, as he travels the talkshow and cafe circuit.

The popster and the pathfinder, In Pan Alley and Shubert Alley, Sinatra and Sondheim-whatever you call these two forces, they have forever been slugging it out inside a dark corner of the Styne cranium. Depending on the progress of the fight at any given moment, he can produce another "People" (which may have little to do with the show at hand, "Funny Girl," but will make Barbra Streisand a star and Styne a bundle), or another "Rose's Turn" (the thunderous Merman finale in "Gypsy," which fills just one need and fills it dazzlingly).

Born in London in 1905, Styne was the son of Ukrainian Jewish emigrees who kept an egg-and-butter shop, spoke a blend of Yiddish and Cockney and did little or nothing to encouirage their child to become a musician. Nevertheless, after the family moved to Chicago (the father becoming an egg inspector), young Jule demanded a piano and was playing with the Chicago, Detroit and St. Louis Symphonies before he was 10.

He was only 11 when a wise old musician told him his hands were too small. So Styne turned from classical music to jazz and the Chicago dance bands of the '20s. He played with Glenn Miller and Benny Goodman (and, one night, with Al Capone, who insisted on conducting an impromptu performance of "Rhapsody in Blue.")

Hollywood followed, and Sinatra, Styne, Sinatra and Iyricist Sammy Cahn became a triumvirate that lasted the better part of a decade and ruled the pop charts with songs like "I Fall in Love Too Easily," "I'll Walk Alone" and "Time After Time."

Styne's Broadway career, begun in earnest in the early '50s, incorporated all of his earlier influences, all of his conflicting ambitions and all of his astonishing creative energy. He is the chameleon composer of the musical theater. He can write like a hack in the company of hacks, or like a genius in the company of geniuses.

At first it is hard to believe so much creative commotion could be churning inside so small a man with such a dazed, Mr.-Magoo-like way of going through life. At 73, Styne has the soft, slightly round look of someone rich enough to avoid all strenuous tasks (which, in Styne's case, appears to mean anything more demanding than flicking a light switch).

Even basic verbal communication is an area in which Styne has been known to need assistance. Betty Comden and Adolph Green (who collaborated with him on the musicals "Do Re Mi" and "The Bells Are Ringing") once write this definition of his way of talking:

"Stynese (or Styne-ese), n. language circa middle 20th century, spoken and understood by only one man. Noted for its incomprehensibility. Delivered in darting, unfinished, broken phrases. Example: (on the subject of Theater Dynamics) "What we in the theater call 'dynamics' is-well-fast. . . but not-you can't do that-a slower tempo would-together-that's now how, well, if two-not right away-but-Dorothy, let's go have a cup of coffee."

"Dorothy" is Dorothy Dicker, who helped rescue Styne from financial and other kinds of disaster in the 1950s and has been at his side ever since, usually literally. When Styne got lost in the corridors of WTTG-TV last week, searching for the men's room about two minutes before his scheduled appearance on "Apnorama," it was Dicker who set him straight.

"If I can take a few of the little things off his shoulders," she says, "that's what I'm here for."

The biography (which Styne describes as a collaboration, although only Taylor's name appears as author) is very much in the current mode of frank show business memoirs. It tells, quite casually, of his life-long gambling obsession and of the hairy financial practices that had him owing his government, his former wife and assorted bookies a combined half million dollars at the height of his irresponsibility in the mid-1950s.

When Bob Merrill and Styne were working on "Funny Girl" in 1963, Merrill once saw Styne emerge grinning from a poker game only to be accosted on the sidewalk by two hoods and the greeting: "We'll take that. Now, you only owe us $14,000."

Today, as befits a man of his years and achievements, Styne says, "I don't owe a dime." But there is none of the purged and sanitized air about him that characterizes other show-business figures who have gone public with their transgressions. Looking back on it, Styne sees gambling-within reason-as a favorable influence in his career. "I was gambling heavily through 'Bells Are Ringing' and 'Gypsy' and 'Funny Girl'," he says.

(The first and last of those shows, curiously, had gambling as a plot element-a sinister one-as did the Styne musical "Do Re Mi.")

The gambling days also were the Sinatra days, and Styne says he has few regrets about that influence on his life, either. No matter that Sinatra threw Styne out of his house twice and would mercurially cut him dead whenever he suspected Styne of devoting less than total attention of Sinatra's interests.

On one occasion, without consultation, Sinatra moved Styne's luggage from the Beverly Hills Hotel to Sinatra's house, leaving word at the hotel that Styne was expected to move in for the duration of his stay on the coast. But no sooner had he arrived than Sinatra, remembering a date scheduled for that evening, tossed him out again. Styne was forced to leave so abruptly that, still later that night, he found himself in excruciating stomach pain for lack of the ulcer medicine he had left at Sinatra's.

At the book recounts this episode, the desperate Styne sought help from collaborator Cahn, who suggested he sneak back into Sinatra's house (he had a back-door key), fetch the pills and, if sighted, explain to Sinatra: "I forgot my pills and I'm dying." Cahn seemed to think that was explanation Sinatra would accept, but it never put to the test since Styne managed to get in and out unobserved.

He now classifies all such difficulties under the general rubric of Sinatra's "fun and games." And fundamentally, he figures, Sinatra has stayed loyal. "Every time he got married, I was invited to the wedding," says Styne.

True, he concedes, "I can call him tomorrow and they'll say he's out and I'll know he's sitting right there by the telephone. He's just decided he doesn't want to talk to me." From another person such conduct might be insulting, says Styne, "but it's normal for Sinatra."

Feuds, jealousy and small-mindedness run rampant through Styne's life story, and he takes every instance in stride:

Bert Lahr, Merman and Straisand, among others, using their influence to connive for more stage attention or to be rid of disagreeable co-workers; John O'Hara insisting (when contacted about a Styne-produced revival of "Pal Joey") that "The only thing I don't want ever to do is talk to Dick Rogers-I loathe the man"; June Havoc calling her sister Gypsy Rose Lee "cheap" and adding, for emphasis, "She eats out of tin cans. . . ."

Through all the hubbub, Jule Styne kept on writing music, sometimes for three and four different shows at once. "Artuno Ui," "Funny Girl" and "Fade Out-Fade In," all with Styne scores, opened in a single Broadway season, 1963-64.

In a couple of hours, he and Cahn wrote "Three Coins in the Fountain" to help a desperate Darryl Zanuck rescue a movie so awful that its director (Jean Negulesco) had thrown up at the first full screening. The song, sung under the opening credits by Sinatra with about five minutes of rehersal, helped the movie gross $9 million, and the single by the Four Aces sold over a million copies.

The Styne "trunk"-his store of musical flotsam and jetsam from past ventures-is also legend. "Everything's Coming Up Roses," under a different title, had been tossed out of "High Button Shoes' before it joined the score to "Gypsy."

Another "Gypsy" hit, "You'll Never Get Away from Me," was first written for an unfilmed Marilyn Monroe movie vehicle, then later actually used in a TV musical of the movie "Ruggles of Red Gap," with the title "I'm in Pursuit of Happiness."

Sondheim was furious when he found out. But it was too late-"Gypsy" was already a huge hit. In any case, says Styne, "A lot of Sondheim's rules, he'd be the first one to violate."

Anyone who works with Styne, or merely contemplates working with him, runs the risk of going absolutely dizzy at the unpredictable shuffle of his enthusiasms. In the book, Anita Loos recalls a time when a musical for Marlene Dietrich. So Loos concocted an appropriate idea only to todl: "Listen, forget about Dietrich. Split the character of Marlene's into three people. It's now going to be the King Sisters." Still later, it was back to one character and Sophie Tucker.

Needless to say, the biography, the talk shows and the reminiscences don't mean retirement. They are just an add-on to an already staggering schedule of activities.

Styne is collaborating on one musical with Herb Gardner (author of "A Thousand Clowns") and getting ready to do another, and adaptation of "Treasure Island" with John Dexter directing. As a producer, his plans include presenting Isaac Bashevis Singer's "Teibele and Her Demon" on Broadway in the fall.

This represents a modest scaling down from his old level of activity, but Styne wants it understood that he hasn't lost the capacity.

"As I sit here and talk to you now, I'm writing," he says. "Give me any situation and an idea for a song and I could sit down now and write it in about eight minutes." CAPTION: Picture 1, "Give me any situation and an idea for a song and I could sit down now and write it in about eight minutes." AP; Picture 2, Sinatra, Cahn and Styne in 1943: "A triumvirate that lasted the better part of a decade and ruled the pop charts." From "Jule" By Theodore Taylor, Random House