"The church seeks the transformation of property," El Salvador's Archbishop Oscar Romero told worshipers in the downtown cathedral here this morning.

His audience, an overflow crowd of peasant farmers and even poorer city dwellers, listened with rapt attention.

"The church cannot remain silent in the face of social, economic and political injustice," he continued.

In an atomosphere of "institutionalized sin," Romero said, "Latin America has been looking for happiness without God."

Those with-power in El Salvador - the wealthy landowners, the business community, the military-controlled government - believe the Catholic church is promoting a revolution among the country's 4 million landless and illiterate people.

Judging from Romero's words, they are right: but the priests say that the revolution they seek is a nonviolent one.

Twenty years ago, Romero's sermon would have been unthinkable in this near-feudal country. Even last year, many priests like Romero could be counted on to defend the status quo. The Catholic Church, by its own admission, has contributed in a large part to Latin America's great social and economic inequalities, and the concentration of power in the hands of those few who own the land and the guns.

The change within the church now has brought it close to open warfare with the traditional power structure here. This year, two priests have been killed in El Salvador and many others have been imprisoned and expelled.

Their punishment has come openly from the government and clandestinely from secret terrorist executioners who are believed by many of the country's more than 200 priests to be supported by the government and the small landowning elite.

While many priests agree that the church's transformation has been a long time coming, the struggle had infused them with a martyr's spirit and an almost cheerful air of doomed Christians facing voracious lions.

One priest, a Jesuit, explained his personal "evolution" from "political conservative and intellectual" to activist.

Dressed in a sports shirt and slacks, with thinning hair and an easy grin, he looks more like a middle-aged suburbanite than a Third World activist. Like most of the fewer than 40 Jesuits here, he teaches at San Salvador's Catholic University.

When he says things like "There is a great valor in dying for an ideal," and "We will perform a service by our death as well as our lives," it is hard to take him seriously. His voice is less than sonorous, and his face distinctly non-heroic.

He came to El Salvador nearly 20 years ago from his native Spain. The Jesuits, he said, "were an intellectual elite . . . well educated, well trained," and more inclined toward study than revolution.

Then, in 1962, came the Vatican II ecumenical council, where the social conscience of Pope John XXIII at first was near blasPhemy even to many of the younger clergy.

"But when we began to have contact with other priests from all over the world," the Jesuit said, "we began to understand that the church has a mission."

[TEXT OMITTED FROM TEXT]denly became aware of national reality," including the great social and economic divisions here.

"Three alternatives for the future of the country outlined themselves," he added.

"It could continue to be the same, a sort of 18th-century feudal society. That was the worst alternative, because it is like a volcano, with building pressure. If it explodes, it will destroy everything it encounters."

The second alternative was a Marxist-socialist state, "like Cuba, I have always been a political conservative and history has shown that once Marxism gets into power it doesn't respect liberty."

The final choice, he said, was the "Christian solution. Social reform, as fast as possible. I now believe it is the only way to defend Western civilization."

While the will for social change may have begun growing years ago in many El Salvador's priests, it took a long time to show itself. Last year, when the government of then-President Gen. Arturo Molina got around to proposing a land-reform program, the Jesuits were among the few priests here to support it strongly. Following pressure from the business community and landowners, Molina gutted the program.

Then, in March, the Rev. Rutilio Grande, leader of a Jesuit program to train peasants and "raise their consciousness" in the small town Aguilares was killed by unknown assassins.

Grande' death had a profound effect on the official Catholic community.

"When we (Jesuits) first opposed the government," the priest said, "we found ourselves alone, apart from the main church here."

Suddenly, the Jesuit said, Romero, an ostensibly spineless conservative installed with government backing in the belief that he could see easily handled, saw that not only were peasants persecuted, "but they had killed a priest."

Enraged, Romero called special Masses, closed parochial schools and publicly denounced the government.

"At this moment," the Jesuit said, "came a very interesting phenomenon. Even the priests who didn't necessarily agree with us joined in a feeling of solidarity. It was marvelous. It was like an army, a nationwide sensation."

In Jne a rightist terrorist group called the White Warriors' Union gave Jesuit priests 30 days to leave the country or be assassinated.

The threats brought a cry of solidarity from Catholics around the world, extensive international publicity and a belated government promise by the newly installed president, Gen. Carlos Humberto Romero, that the priests would be protected. The deadline expired last week without reported incidents.