Every year or so, there is another report: Somewhere in the vast frozen misery of the Gulag, Raoul Wallenberg is alive, still a prisoner of the Soviets after 35 years. The reality flickers erratically, threatened by the strong winds of the Soviet denials, but it persists -- in a telephone call from a prisoner to his daughter in Israel, in the drunken words of a KGB officer, in anonymous reports from Russian dissidents smuggled out from time to time. There are those who feel that Wallenberg has got to be alive, if only because it is too hard to contemplate that so courageous a hero could have died so anonymous a death.

Yesterday, the Swedish businessman who saved the lives of nearly 100,000 Hungarian Jews in the last days of World War II, only to disappear in the wake of the Russian occupation of Budapest, became an honorary American citizen. "What he did was of biblical proportions," said President Reagan, as he signed the bill that made Wallenberg the second honorary U.S. citizen in history, after Winston Churchill. "How can we comprehend the moral worth of a person who saved tens and tens of thousands of lives? . . . Wherever he is, his humanity burns like a torch."

They gathered in the First Lady's Garden to watch the signing of the law and to hear the president promise to do everything in his power to discover what happened to Wallenberg. Among the guests of honor were Wallenberg's half-brother and half-sister, who flew in Sunday night from Sweden, and Simon Weisenthal, the legendary Nazi-hunter. "He was a true idealist, a hero in the classical mode," said Annette Lantos, whose husband, Rep. Tom Lantos (D-Calif.), introduced the bill that made Wallenberg a citizen. She herself has worked for the last four years to bring Wallenberg's case, his courage, to public awareness, hoping to find a final resolution to his fate. She and her husband were among those whom Wallenberg saved. "It became almost a compulsion to help this man," she said. "We did it mostly for our own consciences' sake. I could not go on with my own little life, as satisfying as it was. I had to repay this debt. He had a Christ-like compulsion -- he was his brother's keeper. He really believed in loving others as he loved himself. And what he really believed, he was."

His half-brother Guy von Dardel, now a physicist living in Lund, Sweden, remembers Wallenberg as a man "with a great sense of humor, a very intelligent man who, while not religious, was alway concerned." Was there ever a hint of his destiny in those days, of the great courage he was later to demonstrate? Von Dardel smiled and shrugged his shoulders as he walked, in the warm October afternoon, away from the White House. "There are not too many occasions, in a civilized life, to demonstrate courage," he said. "I don't think even he had any idea."

Tom Lantos was 16 when he met Raoul Wallenberg. He had escaped from a labor camp near the town of Vac, and he had made his way south to Budapest, to one of the "protected" houses Wallenberg had set up to shelter Jews. "I was one of the young men who volunteered to do any chores that he needed done, from carrying messages to getting food, anything." Lantos spoke of this reluctantly, unwilling to divert the attention from the man whose mysterious martyrdom he seeks to end. "To me he was not just a Swedish diplomat. His heroism was so palpable."

Lantos accompanied Wallenberg as he went to the cattle trains armed with special passports and asked the frightened prisoners crowded in the cars that would take them to the death camps if anyone there came under Swedish protection. "Some were, some claimed to be," said Lantos. "He bluffed his way through, he had no real authority. His authority was his own courage. Anyone could have shot him to death and not answered for it. He was absolutely unfearful for himself, he abandoned himself totally. In a more civilized, rational and humane way, he was like the primitive aboriginal soldiers who painted their bodies blue, thinking that this would protect them from physical harm. It was as if his courage was enough to protect him."

Raoul Wallenberg was 32 when he went to Budapest in 1944 as a special attache' to the Swedish embassy. Pictures at the time show a pale young man with dark hair and dark intense eyes. He was the son of a famous and powerful family, a family of bankers, diplomats and bishops, often referred to as "the Rockefellers of Sweden." He had studied architecture at the University of Michigan, and rather than pursuing a career in the family's banking business, settled with something less than contentment into an import and export business when he was asked if he would be interested in volunteering for the rescue mission.

The Swedish government had sent Wallenberg, at the request of the U.S. War Refugee Board, to mount a one-man rescue effort of Jews in Hungary, one of the largest remaining European Jewish populations in the waning days of the Third Reich. For six months, until the Russians marched into Budapest, Wallenberg was everywhere, distributing thousands of special protective passports, setting up 32 "safe houses" that flew the Swedish flag and offered a haven, though not an impregnable one, to those seeking safety, pulling people with his bare hands from their places in the death marches to the Austrian border, defying armed guards to drag people from the cattle trains even as the doors were being nailed shut. He scrounged food and medicine from every available quarter, appealing to the greed and fear of the officials in whose hands thousands of lives rested, appealing, occasionally to their reason. "Look," he once said to Adolf Eichmann at a dinner party. "You have to face it. You've lost the war. Why not give up now?" Eichmann said he had still had a job to do and, turning to Wallenberg, said, "Don't think you are immune just because you are a diplomat and a neutral." Several days later, Wallenberg's car was rammed by a German truck. By chance, Wallenberg wasn't in it at the time.

He was not as lucky with the Russians as he had been with the Germans. Three and a half weeks after the Russians entered Budapest, Wallenberg and his driver left for the town of Debrecen in the company of two Russian officers. He did not know, he said at the time, if he was going as their guest or in their custody. Then he disappeared.

First, the Soviets told his family that he was safe. Then they said he had died in the street fighting in Budapest. And that was all they said, until 1957, when Andrei Gromyko said that a prisoner named Wallenberg had died of a heart problem at Lubianka prison 10 years before.

Still the reports came that he was alive, and in the last few years they have come more frequently, tantalizing, unconfirmed, smoke from the torch that burned so brightly in Budapest. He was in a mental hospital, said one. There was an old Swede in Blagoveschenski prison, said another. In 1977, Jan Kaplan phoned his daughter Anna Bilder in Israel to tell her that he was back in Moscow, having been released from prison. "Don't worry about me," he said, when she expressed concern for his health. "Why, when I was in Butryka prison in 1975, I met a Swede who told me he had been in Soviet prisons for 30 years and he seemed reasonably healthy to me."

In 1979, a young immigrant to Tel Aviv told the tale of a party he had attended at the home of a KGB officer. According to John Bierman in the book "Righteous Gentile," "Among the younger men, the talk got around to dissidents and what a hard time they must have in prison. Overhearing this, the KGB man lurched over to where this conversation was going on and said: 'Don't you believe it; things aren't so tough nowadays as they used to be. You can live a long time in jail. Why, I have a Swede under my charge in Lubianka who's been inside for over 30 years.' "

When Alexander Solzhenitsyn came to Sweden to receive his Nobel Prize, said Nina Lagergren, Wallenberg's half-sister, he came to visit her parents, who died last year. "He was quite convinced that Raoul could well be alive," said Lagergren, who is now the wife of the chief justice of the World Court in The Hague. The family has talked to other prisoners released after 30 years or more of imprisonment, prisoners long declared dead before their belated resurrection.

If he is alive, Raoul Wallenberg is 69 years old. If he is alive, he is now, with his honorary American citizenship, "the ultimate American hostage -- 13,000 days in the Gulag," according to Annette Lantos. "What this really does," she said of the day's events, "is to save America's public record. Otherwise there would be a terrible dark blot on America's record of mercy. There would be one time that America had turned its back. At least with Wallenberg we know that one attempt was made to stem the terrible tide of slaughter."

Annette Lantos believes Raoul Wallenberg is alive. As she stood in the White House garden she said, "I think like a phoenix, he will rise again from the ashes."