FAMILY LINEN. By Lee Smith. Putnam. 272 pp. $15.95.

Down Virginia way, Lee Smith has done it again, well-nigh perfectly this time. Leaving the hills behind, she has come to town, setting her sixth novel in tiny Booker Creek near the North Carolina border. But even without the moonshinanigans, this book is a humdinger, warm and funny.

Smith has been compared, sometimes justifiably, with every fine southern writer in the canon, proclaimed the new Welty, O'Connor, McCullers, Lee, Glasgow or even Faulkner. Now she seems to have recognized that it's getting crowded in the Southern Gothic temple. "Family Linen" moves beyond the sacred precincts of St. Genre into the broader area of middle-class America (albeit below the Mason-Dixon line).

Not that decadence, despair and vengeance go unattended. It's precisely the question of whether genteel, intellectual Miss Elizabeth actually axed to death her first husband around which the story revolves.

The only one of her children who was ever quite good enough for Miss Elizabeth was her oldest daughter, Sybill, now a middle-aged teacher in Roanoke. Sybill, who has "an immense interest in being right," discovers through hypnosis that her terrible headaches may result from the shock of having witnessed the killing as a child. Before she can question her mother, Miss Elizabeth dies of a stroke.

Sybill's siblings include Myrtle, everybody's cliche' housewife, who is proud of her ideal marriage to prosperous dermatologist Dr. Don Dotson.

Candy, a beautician who's let herself go, is the Mother Earth of the sisters, a haven to Don when he needs sexual consolation, and a comforting source of hairdos and beauty makeovers for dead and living alike. (Candy believes "hair is one of the great mysteries. Along with death.")

Sensitive Lacy was the only member of the family upon whom her mother's "poetry took." Still, as a child she felt abandoned by Miss Elizabeth, and later put Booker Creek behind her until her professor husband left her for a graduate student. Finally there's Arthur, unhappy, dissolute and ineffectual, who sees life as one crisis after another, with people dying on you before you can make amends.

When a body is uncovered in the old well, however, it is Miss Elizabeth's sisters who hold the key to the murder: gnarled, Nettie runs the One Stop outside town; fey Fay lives in the world of show-biz mags and the National Enquirer.

The secret of Smith's characters, even her minor ones, is that they seem to lead lives of their own. They don't need the reader's attention to exist, like cartoon characters frozen at the edges of the action, awaiting their turn for animation.

Vulnerable creatures all, they're exposed through their own thoughts in assorted tenses, styles and persons. Smith's ear excels in mountain dialect, and she also has perfect pitch in the idioms and preoccupations of more average Americans. And she's funny, affectionately dousing "Family Linen" in non sequitur and incongruity until the inherent humor, along with the running tragedy and the sheer doggedness of being human, comes bright in the wash.

Best of all, she resists the easy sentimentality of creating freaks. The only conceivable candidate for monster is the victim himself, playing a kind of diabolus ex machina, leaving behind the impression that if he had been given a voice of his own he could have explained the whole thing.

The author has matured with each of her novels, growing ever more sophisticated in her handling of the relationship between character and circumstance. But her greatest strength lies in human relationships themselves, between people and among families.

In her last best book until now, "Oral History," a character ponders "the way you live your life . . . and not know what a lot of it's all about. Connections . . . sometimes you can make them and sometimes you can't." To the growing good fortune of her readers, Smith seems to connect more and more with each novel.