THE ADMINISTRATION makes a great mistake in opposing extension of the independent counsel system. Yes, the special prosecutors, as they used to be called, are hybrids. Creatures of the judiciary rather than the executive branch, they live along a fault line of the Constitution. But these carefully chosen establishment lawyers are hardly the untethered legal cowboys that the Justice Department portrays, and in any case it is a terrible moment for the administration to invoke the constitutional reservations it has had but swallowed in the past. The president signed a bill refining and extending the system in 1983. Now, with four major investigations of past and present administration officials under way, the Justice Department says with White House approval that it will recommend that the president veto a new bill. At best the administration invites misunderstanding of its motives.

The whole point of the independent counsel system, after all, is to preserve the credibility on which democratic government finally depends. Above a certain level, no administration can credibly investigate itself. You need an insulated third party. That is what Watergate re-taught us; Watergate is why we have this law. Attorney General Meese need only look at the questions being raised about even his temporary charge of the investigation into the Iran-contra affair to see why an independent counsel is not just reassuring but invaluable. There is no way the Justice Department could plausibly conduct this investigation, now in an independent counsel's hands. So also with the investigation of the Wedtech affair, which also involves the attorney general. Recusal isn't enough; there is no convincing way to insulate subordinate from boss. The other two announced investigations are of former deputy White House chief of staff Michael Deaver and former assistant attorney general Theodore Olson. Both would be awkward for the department to conduct.

The critics might also recall that this process has been most useful over the years to the accused. Mr. Meese again provides the best example. Confronted at his confirmation hearings with charges that he had profited from office as counselor to the president, he asked that an independent counsel be appointed in his case "because there must be a comprehensive inquiry that will examine the facts and make public the truth." President Reagan endorsed the request, saying "I know that an impartial, prompt and thorough inquiry will demonstrate the high level of integrity and dedication which have marked Ed's long career of public service." When counsel Jacob Stein then cleared him, Mr. Meese was a) delighted and b) confirmed. The president also found it useful to be able to call for the appointment of an independent counsel in the Iran-contra affair, and Mr. Deaver similarly called for one in his case, though on the verge of indictment he too decided that the system was unconstitutional and has asked the courts to strike it down. Now what does the department do -- join Mr. Deaver in the effort to quash? The administration is on the wrong side of this issue.