Two weeks in the theater world's Nirvana invoke two topics: subsidized theater and the new look in British musicals.

One is not responsible for the other, though. The innovations in British musicals occurred in the commercial theater, while the heavily subsidized National Theatre's hottest ticket is that old commercial American smash "Guys and Dolls."

As for the innovations, they spring from a single man, Andrew Lloyd Webber, who is disproving the cliche that "the British never could do musicals." Composer of "Joseph and the Amazing Technicolor Dreamcoat," "Jesus Christ, Superstar" and "Evita," he has now come forward with two more: the amazing "Cats," based on T.S. Eliot's "Old Possum's Book of Practical Cats," and the novel "Song and Dance."

How Broadway's upcoming production of "Cats" in the Winter Garden can match the original in the New London Theater remains to be seen.The house on Drury Lane has been shaped into an arena-style playing area with a revolving stage in the middle. As the lights dim, we are surrounded by blinking cats' eyes from every angle, and as the dream -- for this has the qualities of a dream -- unfolds, the audience is literally wrapped up in the succession of feline adventures and thoughts that are the essence of Webber's brilliant work. The experience is unique; the original cast recording, available in the States since last year, doesn't allow for the visual surprises of design, choreography and staging.

Webber's newer "Song and Dance" is also unique: Its first half is a staged song, "Tell Me on a Sunday," wherein a young woman sings of her adventures against glowing American skylines projected across a background scrim, the most effective use of multimedia I've seen outside an opera house. What a role this might make for Liza Minnelli. The second half is pure dance, led by the Royal Ballet's Wayne Sleep, a marvellously dynamic performer whose own dance company, DASH, allows him to range from ballet to tap. Equity regulations could prohibit his eight dancers from American employment, yet they are vital to "Song and Dance." (Far larger imported dance groups do tour America under another union. The American cast of "A Chorus Line" was allowed to perform in London for the better part of a year. What a world it would be if the English-speaking countries opened their boundaries to one another's artists, leading the way to international cooperation on all levels. Don't expect it.)

WHAT ELSE does London boast this season? The newest musical hopeful is "Windy City," Dick Vosburgh's musical adaptation of the Hecht-MacArthur newspaper comedy, "The Front Page." The production unfortunately recalls the impossibility of turning a good story -- "The Importance of Being Earnest" or "Blithe Spirit," for example -- into a satisfying musical. Those plays are so perfectly balanced that musical numbers seem irrelevant. And in this case, the marvelous set by Carl Toms is also so intractable that it sacrifices the best musical numbers by restricting their space.

Of current West End exhibits, the likeliest import to America is Michael Frayn's "Noises Off," a delightful farce about "putting on a play" that betters George Kelly's classic of the genre. "The Torchbearers." Frayn gives us a group of players trying out a farce in the Feydeau vein, "Nothing On." Act I is an interrupted dress rehearsal, Act II reveals backstage performance disasters and Act, III, several months later, is the total chaos of the production itself.

Performing all this must be nervewracking to the players, whom the author allows to improve in the final act to keep the action as unpredictable as possible. Paul Eddington, familiar to Americans through the PBS series "Good Neighbors," and Patricia Routledge, the only Good Thing about "1600 Pennsylvania Avenue," are the stars, and there's an outstanding performance by Nicky Henson, whose athleticism is as alarming as it is hilarious. This seems assured of an American production and, I'll wager, hundreds will follow.

The West End itself and the once-elegant Shaftesbury Avenue are not very happy places nowadays. Some major theaters are dark, and prices are up to a top of $17.50 to $20, higher than theater-accustomed Brits can pay. Like their Broadway counterparts hoping for restoration of the 42nd Street theaters, theater managers are praying that the rebuilding of Piccadilly Circus will rekindle the glamor.

Like Broadway, too, the West End's vitality stems from the regionals, or as they're called here, "the Fringe" theaters. From such have come "84 Charing Cross Road," the correspondence of a New Yorker and a London bookstore proprietor, which Ellen Burstyn will be doing this Broadway season; "Summit Conference," an imaginary meeting between the mistresses of Hitler and Mussolini; "A Star Is Torn," wherein Australia's Robyn Archer mimes such singers as Bessie Smith, Judy Garland and Janis Joplin; "Another Country," about how English public school life creates traitors of upper-class backgrounds, and even a Coward revival, "Design for Living." Small compasses and small casts imported from small theaters, these shows once would have had little hope of West End runs; now they're welcome.

Typical of the Fringe is "Trafford Tanzi," created at Liverpool's Everyman Theater, now at the East End's Half Moon Theater. Playwright Clair Luckham imagines the life and career of Tanzi, a female wrestler who marries a male wrestler, Dean Robel. From birth to ultimate triumph, the story is told in a series of wrestling matches, first with her parents, then with her chauvinist spouse. The setting is a realistic ring in the center of about 200 people perched on benches.

The gymnastics must be punishing, but they're also fantastically comical and the whole makes neat, elusive points about the feminine mystique. This would be relished in America but only under similar "fringe" conditions. Poverty is a fringe characteristic everywhere.

WHAT OF the well-subsidized National Theater and the Royal Shakespeare Company? Americans have long admired their ideals as well as their financial arrangements, but know little about the intrigue and rivalries that thrive there -- both between the companies and within them. An aid in that regard is "The Royal Shakespeare Company: A History of Ten Decades," a most illuminating book by Sally Beauman, wife of actor Alan Howard, who will be starring on Bradway this fall in the RSC's "Good." The Oxford University Press has published this provocative volume simultaneously in the Unites States.

In the rivalry between the companies, the RSC presently is well ahead of the National, thanks to the quality of its speech. This is a strong point of its "Much Ado About Nothing" at Stratford, as beguiling a production as one is ever likely to see, with a brilliant Benedick and Beatrice from Derek Jacobi and Sinead Cusack and a rare Dogberry by Christopher Benjamin.

The RSC now has two London stages in the long-delayed Barbican complex. But the Barbican, built in the bomb-destroyed areas of north St. Paul's Cathedral, is a disheartening vision of the 21st century. The ventilation is Stygian, especially in the smaller theater, the Pit, seven stories underground. The design is sometimes awkward and the color scheme ghastly.

In time perhaps Londoners will get used to the Barbican as they have, after eight years, to the new National on Waterloo Road. So vast and impersonal are both that the Kennedy Center seems like a summer cottage.

The National's three-theater repertory is thoughtfully varied, but not always excitingly carried out. "Danton's Death" by the German dramatist Georg Buchner, for instance, is a literary triumph -- but Peter Gill's production of it fails to prove that it also is a theatrical one. Alternating performances at the National boast Paul Scofield as "Don Quixote," along with "Schweyk in the Second World War," "The Beggar's Opera" and "The Importance of Being Earnest." But the big hit is "Guys and Dolls."

Unfortunately, the voices in this production of the Loesser-Serling-Burrows musical aren't up to the score. However, Julia McKenzie, widely experienced in musical roles, is a glorious Miss Adelaide, singer as well as actress. And Texan David Healy, long the sole Yank of Britain's National Theater, is twinkling enough to dim the memory of Stubby Kaye's "Sit Down, You're Rockin' the Boat." Learning we're from Washington, he says: "Remember me to my brother Tim." Tim? He's Father Timothy Healy, president of Georgetown University.

The commercially popular Alan Ayckbourn has been lured from private management into becoming the National's resident playwright. But his latest, "Way Upstream," has had to postpone its opening a fortnight.Ayckbourn's setting is a small boat; the National employs a real one on a stage flooded with water. But the stage is leaking, the boat tips unpredictably and there's been talk of seasickness in the cast. So, the postponement.

This strange situation parallels one on the Royal Shakespeare Company's Stratford-upon-Avon stage, in which King Lear and his contemporary, Kent, dip their feet in a stagewide pool, an image recalling boy-hood. It's a nice concept from director Adrian Noble, but why? Isn't make-believe the art of acting?

From Shakespeare to Runyon, British audiences delight in words for their variety, color, subtleties and exuberance. Speaking them clearly, up and down the scale and with very limited gestures, their players make music.

That the two major subsidized theaters squander funds on such flash as water-filled stages seems a foolish refutation of the words their players deliver with such imaginative zest, pride and affection. Perhaps it's just the directors, trying to make, well, a splash.