Denounced only a few years ago as a dangerously liberal reformer by the followers of Generalissimo Francisco Franco, Manuel Fraga has emerged from the confusion of post-Franco Spanish politics to try to pick up the late dictator's political mantle and lead Franco's forces back into power.

"All the Spanish people are Franco's heirs, whether they like it or not," Fraga said in rapid bursts of English during a recent interview. "I think the country is better for it. But Franco is dead, and most of his system is gone. What we want is to preserve the society he built."

Fraga's attempt to turn a liberalism that may not be as intense as many Francoists thought to a rightist position that may not be as entrenched as he now suggests is a chart of the rough waters King Juan Carlos has navigated since succeeding Franco 17 months ago.

Fraga, at 54, is a burly but quick man who is Spain's most impulsive and contradictory politican. Authoritarian in manner - he convincingly warns those who anger him that "I will break your face" - Fraga appears to be more interested in power than ideology.

At the moment, he represents the last major obstacle to Prime Minister Adolfo Suarez's efforts to fragment the votes of the political extremes in the June 15 parliamentary elections. Suarez, due in Washington on a working visit this week, intends to dominate a fragmented Parliament and continue to rule after the first free elections in Spain in 41 years.

Until last week, Fraga appeared to have little protection against the emerging strategy of Juan Carlos and Suarez. Now he clearly feels that the backlash from Suarez's awkwardly handled decision to legalize the Communist Party has given him a boost.

The decision set off rumbles within the army and may have driven some senior commanders into an active alliance with Fraga, already their favorite. Usually well-informed sources suggest that the army may try to protect Fraga's Popular Alliance Party from the considerable pressures Suarez can bring and demand that Suarez remain neutral in the campaign.

Suarez' success at dominating the center, with the support of Juan Carlos, has helped drive Fraga to the right in search of a power base. Fraga candidly acknowledges that he believes the government is miscalculating the strength of the "natural conservative vote, the people who want prosperity and order in their lives."

His rivals assert that he represents the people who profited from Franco's rule. Six of Franco's ministers, including his last prime minister, Carlos Arias, have joined Fraga in the Popular Alliance, which Fraga says is certain to win more votes than any other party in the June balloting.

Like Franco, Fraga is a native of Galicia, Spain's rural and impoverished northwestern shoulder. The people of Galicia are viewed by other Spaniards in much the same way as the English view the Scots.

Fraga served the generalissimo as information minister in the 1960s, but ran afoul of the rightists by allowing subordinates to put through limited reforms of censorship and press laws. Franco sent him off to London as ambassador.

After Franco's death, Fraga became the King's interior minister, controlling the police. While pushing electorial and other reforms, Fraga strongly backed the rough suppression of Basque nationalists and other dissidents. A year ago, Fraga was being portrayed by diplomats friendly to the government as the hope of a centrist future for Spain.

His vivid temper and occasionally overbearing manner, however, apparently alienated the king, who passed him over for the unknown Suarez when Arias was dumped last July. Fraga left the government, and now diplomats are describing him as a threat to democracy.

Fraga and Suarez both came up through the National Movement, the umbrella political organization that Franco substituted for political parties. Their rivalry for the same levers of power came into the open earlier this month when Suarez effectively dismembered the Movement, partly to keep Fraga from using its local machinery as a base for the Popular Alliance.

Such maneuvering may appear marginal to outsiders, but the fact that the battle between the two naturally authoritarian figures is being fought out over how the electoral process works is a significant measure of the changes that have occurred since Franco's death.

Still given to the pinstripe suits of his ambassadorial days and the aggressive manner of his governmental commands. Fraga predicted during the interview with the decision to legalize the Communist Party would add between 5 and 10 per cent to his party's vote in June.

He puts that toal at between 35 and 45 per cent now. Independent analysts peg it closer to 25 per cent, but they point out that even this would give the Alliance a commanding position in the Senate, which could then block major reforms in the two-chamber Parliament.

Fraga bridles at the suggestion he is against reform.

"Look, Franco is not there any more. We have already made the reforms. We don't believe this country should have a new constitution now" - a task Suarez has hinted the new Parliament will be given - "but just an English-style Parliament to pass laws to preserve what we have."

The only government action he would like to see changed is the legalizing of the Communists, "which was a historic mistake. It was a coup d'etat against our laws." Fraga skirted dangerously close to appearing to call for a coup of his own last week by endorsing the army's indignation over the Communist decision. He was denounced by Suarez supporters for "sedition."

Noting that "anti-communism is our main issue in this campaign," Fraga said he hoped to be able to form a center-right coalition in Parliament. He said, however, that he would not rule out a coalition with the Socialist Party if circumstances led to it.

Said by the police to be the Spanish public figure who receives the most death threats, Fraga has been tirelessly traveling the country, pumping hands and picking up abundant financial support from bankers and businessmen.

"While the others are still getting organized around the starting gate, Fraga has already bolted out onto the track a quarter mile," said one diplomat. "He's the only one who works at this. Suarez is good in the Byzantine court bloodletting, but not at getting the crowd with him."

Fraga appears to be the only politician with any hope of winning a big enough share of the vote to make it politically difficult for Juan Carlos to keep Suarez in office.

"The fraga vote will tell us about the nostalgia for the Franco regime," said one Spanish journalist. "But it may also tell us more. Without the king, Suarez is nothing. However much some of us dislike him, Fraga is somebody who has his own weight."