WITH FLASHING RED and green lights, score cards borrowed from a diving competition and the strains of classical music filtering into the Interior Department auditorium, a panel of five judges this month selected the design for one of the country's most popular stamps.

In a public contest that lasted two days, the Fish and Wildlife Service selected its 1991-1992 migratory bird hunting and conservation stamp -- the federal "duck stamp" that is both prized by waterfowl art collectors and mandatory for duck hunters.

This year, after the judges screened the last of the 626 paintings for final time, they selected a pair of king eiders set against their native subarctic tundra for the next stamp in a series that dates to 1934. Although the king eiders are relatively rare and not among the species prized by hunters, officials predicted that their selection will bring instant fame and fortune to the winning artist, Nancy Howe of East Dorsey, Vt.

"Oh, my goodness, that's incredible!" she exclaimed when Interior Secretary Manuel Lujan telephoned her about her victory. Howe is the first woman to win the competition.

"I've entered the competition for a number of years and I've been wondering when a woman would win," she told Lujan. Howe, 40, an arts graduate from Middlebury College, has been painting since childhood and has also been interested in waterfowl for a long time.

"I love slogging through the swamps and, as winner of the duck stamp contest, I am looking forward to speaking on behalf of wetlands," she said. "My heart is in the swamps."

The selection of her acrylic design will give Howe plenty of opportunities for that. Although the government will not have to pay her for use of her design, officials say sales of limited edition prints may net Howe more than $1 million. She will also be asked to attend waterfowl shows across the country next year.

Revenues raised by the stamp, which will begin next summer, will be used by the Interior Department to purchase waterfowl habitats. Since the first duck stamp was issued, the program has raised over $350 million for purchase of nearly 4 million acres of wetlands. Howe's stamp will be the first in the series to sell for $15, an increase from the current $12.50.

The king eiders Howe selected for her design are typically found in arctic coastal waters, although they have been known to winter as far south as New Jersey and California. Howe said she selected the birds because they were the only one of the five eligible species on display at a nearby museum in Vermont.

"I decided this year to do something that looked like a small, fine painting; something that would capture a mood and that my heart was in," she said.

The public nature of the duck stamp competition, with a federal attorney on hand at all times to police the judging, contrasts with the closed-door procedure that the Postal Service uses to select artwork for its stamps. But the Postal Service has announced that it, too, soon will hold an open competition for one of its upcoming stamps.

The stamp will celebrate the 1992 Olympic baseball competition to be held at the summer games in Barcelona. Anyone willing to pay a $100 fee can enter the competition, which will be judged initially by a panel of experts in the fields of philately, art and printing.

The 100 designs selected by that panel will be reviewed by the Citizens' Advisory Stamp Committee, which will, in turn, recommend a final design to Postmaster General Anthony M. Frank. The winning artist will receive the standard $3,000 Postal Service design fee, plus a trip to Barcelona. Entries in the U.S. competition must be postmarked by Dec. 31. ACTOR KARL MALDEN is one of five new members of the Citizens' Advisory Stamp Committee. Other new members of the committee include David Lewis Eynon, executive vice president of Amichetti, Lewis and Associates of Bryn Mawr, Pa.; Bernard Henning Sr., a lawyer and well-known stamp collector from Chicago; Stephen T. McLin, president of American First Financial Corp. in San Francisco; and Robert H. Power, general partner of the Nut Tree Restaurant, near Sacramento, Calif. OLYMPIC STAMP COMPETITION

rules and contest forms are available from the International Stamp Art Competition, P.O. Box 23990, Washington, DC 20026-3990. Call 202/872-1992 for information.

DUCK STAMP COMPETITION rules for next year will be released in March by the Federal Duck Stamp Office, Fish and Wildlife Service, Room 2058, Department of Interior, 1849 C. St. NW, Washington, DC 20240. Call 202/208-4354.

Bill McAllister is a member of The Washington Post national staff.