THE WAR of liberation against entangling regulation is proceeding briskly in the sausage trade. Butchering meat is an inexact science, particularly when done by automatic machines, and occasionally small amounts of very finely ground bone get into the meat. The Agriculture Department has a regulation requiring the manufacturer to declare on the label that, along with all the other good, nutritious, body-building, spirit-lifting ingredients, the sausage may contain a trace of powdered bone.

That, it turns out, is bad for business. The meat industry has learned, it says, that people read those labels more carefully than you might think and are discouraged by the discovery that there's bone in the sausage. There's also concern among the packers about the further requirement that the meat must contain no more than 30 percent fat. The industry states that it has hard evidence that the regulation prevents customer acceptance.

Mankind prospered for centuries without ever inquiring very closely into what went into its sausages. The industry raised the question whether there's any need to change things now. Bone meal is good for flower beds. Can it be bad for people? Why not let sleeping dogs lie?

The Reagan administration appears to agree. The sausage regulation is on the list of those that have been called up for review. Evidently the sausage market is now on the brink of being set free. The customers will similarly be set free to eat sausage either with bone meal or without. Don't sit there whining that you don't know which you've got. All it takes is a little initiative. You can send your sausage to the private chemist of your choice, for the analysis of his or her choice.

Perhaps, on further thought, you would prefer to have two hard-boiled eggs instead. Perhaps you are the kind of stuffy anti-libertarian who perfers the label to tell you what unexpected odds and ends might have found their way into the manufacturer's meat-chopper. Perhaps you have concluded that there is a case for at least a few hundred regulations, and that one place for them is in the sausage factory.