Those who miss the lyric sensitivity and melodic invention symbolized by Lennon and McCartney in the mid-'60s need look no further than Chris Difford and Glenn Tilbrook of the vastly underrated British band Squeeze.

That group's fourth album, "East Side Story" (A&M SP 4584), is a terrific slice of pop craftsmanship that's full of thematic chance-taking and compelling production from Elvis Costello and Roger Bechirian. Without resorting to emply initiation, Squeeze manages to evoke the buoyant pop of the "Revolver"-era Beatles, with subtle bows to the Kinks, the Who, the Animals and other distinctive voices of that era.

As a lyricist, the articulate Difford has a strong sense of observation that turns his songs into three- and four-minute popscapes, which are then framed by Tilbrook's varied musical settings. The story lines are drawn from everyday life, colored by an intuitive (and often witty) conflict of pessimism and optimism about the human condition that elevates them above the screams-of-consciousness prevalent in much British rock these days. For instance, the problems and inherent conflicts of living together are explored in "Is That Love" and "Someone Else's Heart," while "Someone Else's Bell" and "Tempted" extend the questioning to cheating hearts. "Piccadilly" and "F-Hole" deal smartly with sexual anxiety, while "Labelled With Love" and "Vanity Fair" address the question of dreams dulled by the weight of ordinariness.

While the album's 14 songs share a literate consistency, the melodies are as varied as a chameleon's cover. "Tempted," sung by keyboard player Paul Carrack, comes on with an early Traffic-like sensuous funk shuffle that owes mush to the Stevies -- Winwood and Wonder. Difford does most of the singing, though, and his voice is up to the demands of the music. "Labelled With Love" is a wistful country rocker that ambles along the same line of thought as the fragile "Vanity Fair" -- memories of lost companions and cherished dreams.

"Vanity Fair," like "F-Hole," benefits from Del Newman's sympathetic string and woodwind colorings, with faint echoes of "Eleanor Rigby" and "Lucy in the Sky With Diamonds." There's No Tomorrow" echoes the haunting elegance of "Abbey Road," while "Messed Around" is based on a joyful rockabilly-style.

Costello's jagged insistence is most evident on "Mumbo Jumbo," but "East Side Story" is above all a celebration of Squeeze's intelligent pop prophecy. There is so much to admire on this album that it's a mystery the band has had so little impact -- and airplay -- in America. Difford and Tillbrook, whose music is defined by jubilant twists and turns, great singing and careful production, are more than worthy of the Lennon-McCartney comparisons.

For examples of dipping into the past and coming a cropper, one need look no further than two other British bands, the Psychedelic Furs and Holly and the Italians. The Furs, whose deadly parade of pseudo-profundity might possibly have seemed fresh for a week or so in mid-1980, have released a second album, "Talk Talk Talk" (Columbia NEC37339) that illustrates that though the words may change, rock is in mortaly danger when the song remains the same. If you enjoy Dylan, Bowie, the Byrds, Roxy Music of the Velvet Underground, stick with the original sources. Richard Butler's clone vocals and the band's drone backing make this imitation the mose insincere form of flattery.

Holly Vincent has another problem entirely. "The Right to Be Italian" (Virgin NFE37359) attempts to jam the exuberant openness of '60s girl groups into a less subtle '80s context. Unlike Cindy Lauper of Blue Angel, Vincent divorces herself from the innocent enthusiasm of the music of that time, replacing it with a guitar-heavy crunch more suited to the heavy metal arena. As a result, her natural verve is overly burdened; the voice is willing but the setting intrudes. Vincent, a seemingly gifted songwriter who sings with the defiant insouciance of Chrissie Hynde of the Pretenders, wuld benefit immensely from similarly spare but compelling production.