Lingerie Democratic disunity based on an ethnic slur has created an opportunity for a Republican upset in the congressional district once represented by the late Leo Ryan.

Democrat Joseph Holsinger, Ryan's former administrative assistant, still is believed to hold a slight lead over Republican William Royer in this sprawling, diversed district south of San Francisco. But in the final stages of a campaign that will end with Tuesday's special election, Holsinger has been unable to heal the deep wounds he caused in the Democratic primary.

In the primary, Holsinger depicted opponent George Corey, an amiable Daly City attorney, as a candidate of the Arab-American lobby and called attention to his Syrian ancestry. As it turned out, Corey received more money from Jewish contributors than from Arab sources, but the attack forced him on the defensive and is generally thought to have contributed to his defeat.

Corey, who had pledge to support the winner in the runoff, refused to back Holsinger, who he said has been "pandering to anti-Arab prejudices."

"I did not envision that the place of my parents' birth could become the central issue in the campaign of a native-born American citizen," Corey said.

Corey's defection has dominated the political discussions in this otherwise quiet suburban campaign.But its importance is discounted by Holsinger's veteran campaign consultant Sanford Weiner, who calls the issue "an inside political thing that is having no effect on voters that we can see."

"The only issue that's alive out there is Leo Ryan," said Weiner.

The strategy embodied in this comment is being followed to the letter by Holsinger, whose brochures and speeches advise voters to "continue the good work of Leo Ryan" by electing Holsinger to Congress.

Though the district, which stretches from the working class area of Daly City on the north to the suburban hot-tub belt of central San Mateo County on the south, has a 56-35 percent Democratic registration edge, it often has voted Republican in the past. And Royer, who holds the nonpartisan post of San Mateo County supervisor, always has attracted a share of Democratic support.

Royer's forces, outspending Holsinger and aided by money and manpower from the Republican National Committee, have mounted a well-balanced, professional campaign which an election day will stress turnout efforts in key GOP areas.

The key to the election, says Royer campaign manager Sal Russo, is the Democratic disunity occasioned by the Corey-Holsinger bitterness.

"They just haven't got their act together," maintains Russo.

On the issues there appears to be little to choose between Holsinger and Royer. Both are hard-working, uninspiring 58-year-old candidates who talk of reducing inflation and cutting the federal budget. Each has been helped by the California presidential aspirants of the two parties. Republican Ronald Reagan has appeared for Royer and Democrat Jerry Brown, who originally backed Corey, has spoken for Holsinger.