Republican leaders crowed with delight and Democrats kept a stiff upper lip following GOP candidate Arlan Stangeland's upset victory in the special congressional election in Minnesota Tuesday.

"This election signals the beginning of the Republican resurgence," said Senate Majority Leader Howard H. Baker Jr. (R-Tenn.).

"The Republican Party is definitely on the way back," agreed House Minority Leader John J. Rhodes (R-Ariz.), who said he was particularly heartened by the party's margin of victory in the first special election since the Democrats reclaimed the White House.

Stangeland took more than 57 per cent of the vote in defeating Democrat Mike Sullivan and two other candidates for the seat vacated last month when Democrat Bob Bergland became Secretary of Agriculture.

Sullivan was closely associated with Bergland and with Vice President Mondale, having worked for both men when they were in Congress.

Bergland, Mondale and other prominent Minnesota Democrats had stumped the sprawling rural district for SUllivan. They told the voters that Sullivan's election was necessary to improve "teamwork" between Congress and the Carter administration.

Nonetheless, Democratic officials said yesterday the result should be seen as a personal loss for Sullivan rather than a party defeat.

"The voters didn't go for our candidate, that's all," said Democratic National Chairman Kenneth Curtis. "We're not mortally wounded by what happened there."

Stangeland attributed his victory to "overkill" by visiting Democratic leaders in the traditionally independent district.

"Voters in this district resent being told how to vote," he said at a victory party.

Another element that apparently influenced the election was Sullivan's image as an outsider. Although he was born on a farm in the district, Sullivan left the area in the 1960s and has worked as a teacher and political aide since then.

Stangeland, in contrast, is a working farmer who has spent most of his life in Barnesville, Minn. A Republican poll showed that 80 per cent of the voters felt it important to be represented by a farmer.

During the campaign, local residents repeatedly complained about the depressed state of grain and sugar beet prices. They expressed skepticism that the Carter administration would do much to change that situation.

Congressman-elect Stangeland is a soft-spoken, 47-year-old conservative who promised the voters that agriculture would be his main concern in Congress.