The delicate diplomacy went on for several months in places like Annapolis and Upper Marlboro and College Park.

Sometimes it involved formal discussions by designated subalterns. At other times the leaders themselves had casual chats.Finally sometime before Christmas, the Democratic leaders of Prince George's County and Blair Lee, the acting governor of Maryland, reached what is known as an "understanding."

There is nothing on paper, there are no hard and fast promises or agreements, and what is "understood" is defined differently by each side. All that is acknowledged is that Lee and the Prince George's Democrats are no longer fighting over gubernatiorial appointments to judgeships and the state boards and commissions - lifeblood of party politics.

"There's peace in the world," said John Lally, chief spokesman for County Executive Winfield M. Kelly Jr.

"It's been cleared up," said Kelly.

"The discussions were fruitful," said Peter O'Malley, the county party's chief strategist.

"The relationship will be smoother from now on," said Lance Billingsey, chairman of the Democratic Central Committee.

"I'm not going to go out of my way to be obnoxious," said Lee.

The dispute began last September when Lee, after only a few months in office, broke a long-established precedent by ignoring a recommendation of the county leadership when appointing someone to the district court. The leadership wanted Robert Reding, a Democratic delegate, for the job; Lee wanted, and appointed, Francis Borelli, a Republican.

"Thet," said Billingsley the next day, "is a flat rejection of the political leadership of Pricnce George's County. It is an alienation of the leadership."

Lee described it differently. He said it was a simple matter of appointing the best qualified person to the post.

A similar incident occurred in early December when there was an opening on the county's Orphan Court. This time, the party leadership recommended a memeber of the central committee, Joanne O'Brien. Lee selected someone outside the county's political network, C. Philip Nichols Jr.

In both instances, the party leadership was not so much embittered by Lee's choice for the post as surprised and disappointed by his show of independence. It was, as Kelly put it, "a new experience for us, with uncertain political ramifications."

That uncertainty did not exist for the seven years that Marvin Mandel controlled the patronage appointments in Annapolis. The arragement between Gov. Mandel and the Democrats of Prince George's County was made in 1971 and unbroken until the day he stepped down last June on the eve of his political corruption trial.

When an appointment came up, the Democratic leadership would meet for breakfast and vote for someone to fill the job. The choice of this group, still known as "The Breakfast Club," would then be made known secretary of state from Prince George's County.

"Fred was the conduit," said one former Mandel aide. "He'd stop by and let Marvin know what the word was in the county. Sometimes, when Fred wasn't around, Pete (O'Malley) would call us and let us know."

Whoever brought the message, Mandel's response was the same. He consistently followed the recommendations of the local politicians.

"I wouldn't want to say he did it slavishly," Mandel's successor, Lee, recalled yesterday. "But I can't recall when Marvin missed one."

From the moment Lee "missed one" in September, the diplomatic discussions with the Prince George's Democrats began. The first discussion was with Kelly, at a meetin in Annapolis.

"I expressed some disappointment in his treatment of the process we have developed here. I let him know that we had carefully refined our recommendation process over the years, and that it could be a valuable tool for him," said Kelly. "He (Lee) said he wanted to show he was independent. He also acknowledged that it was a political year and that he had to form some base of support in Prince George's (the home county of one of his opponents, Maryland Senate President Steny H. Hoyer(."

Hoyer and O'Malley, who were responsible for working out the earlier arrangement with Mandel, had their say with Lee on Oct. 29, at Byrd Stadium in College Park, during halftime of a football game between the University of Maryland and North Carolina. O'Malley recalled the conversation like this:

"I was sitting between (U.S. Sen. Charles) Mathias and Blair's daughter during the game. Lee was two seats away. We bumped into each other at halftime and had to talk about something to fill the time. Steny was there, too.

"In a very casual way, I told him that perhaps he didn't understand the way The Breakfast Club works. i explained how it was a democratic way of making recommendations and that it had great potential as a problem-solver for any governor.

"And, frankly, I also told him that I didn't think it would make any difference politically who he appointed to positions. I said it wouldn't help or hurt either him or Steny. The constituency here (In Prince George's), I said, is not motivated by political appointments. I said it was analogous to his county, Montgomery, in that regard. He agreed."

Then, in mild-December, party chairman Billingsley traveled to Annapolis for another round of political negotiations. The logistics of this meeting remain unclear. Billingsley said he met directly with Lee. Lee said he doesn't recall thalking with Billingsley, but that "perhaps it happened."

Lee thinks that Billingsley actually met with Maurice Wyatt, the govenor's aide in charge of appointments.

From that meeting, according to Billingsley and the other Prince George's leaders, came the "understanding" that soothed their troubles with Lee. The understanding, as they see it, is that Lee will follow the recommendations of The Breakfast Club or, if he does not like the club's preference, he will confer with the country leaders beforehand to work out a compromise.

Lee put it another way. "I reserve the right to make whatever appointments I want," he said. "But I'm not going to make a point of messing them (the Prince George's leaders) up."

One reason Lee does not want to mess things up is that he appears to be the second choice of most country Democratic officials in the 1978 gubernatorial race. The first choice, Hoyer, is considered an underdog in that primary.

"I sense most of the support would shift to Lee if Steny got out," said Billingsley. "If we're all going to be on the state together eventually, there's no reason for us to be enemies."