Next Tuesday's general election may be the closest in Israel's history, according to recently completed public-opinion polls. If recent trends continue, the race may be too close to call.

The Labor Party-led alignment, which has ruled Israel since independence, still appears to be in the lead, but its support has been eroding in recent weeks while the main opposition coalition, Likud, appears to be picking up strength.

It is virtually certain that neither major grouping can win an outright majority, however. The prospects are that even if Labor wins, its bargaining power and authority may be so diminished by its reduced plurality that it may be very difficult to forge a coalition with other parties to govern.

Political observers expect that Israel may have to wait until late June, possibly even early July, before a new government is formed.

A close election will increase the power of the smaller parties. Chief among them is Yigael Yadin's new reform party, the Democratic Movement for Change, which can be expected to hold the balance of power.

According to a final pre-election poll taken last week by Herbert Smith of the Smith Research Center, Labor is leading Likud by only five percentage points, 30 per cent of the vote as compared to Likud's 25 per cent. Twenty per cent are still undecided. Yadin's party is in third place with 11 per cent of the vote.

The big change is that a month ago Smith's poll, the most respected in Israel, showed Labor leading Likud by 11 percentage points. Other polls put Labor's lead at even less.

A month ago Labor appeared to be only holding its own but actually picking up strength following the change of leadership in which Defense Minister Shimon Peres replaced Yitzhak Rabin as Labor's candidate for prime minister.

Voters would still rather see Shimon Peres become Israel's next prime minister than Likud's leader, Menachem Begin, according to the Smith poll; but Peres is running ahead of his party, and it seems that whatever shot in the arm Labor received by purging Rabin after his involvement in a financial scandal has now been dissipated.

Smith said in an interview that a major reason for Likud's rise in recent weeks is a continuing trend among young Oriental Jews to support it. The Oriental News are attracted to the opposition because many of them feel that power in Israel is too concentrated among Jews of European background, young people in particular have been hurt by Israel's economic problems.

Smith calls this "the sorrowful election," because the campaign is being conducted in an atmosphere of general malaise, constant and disruptive strikes, repeated scandals and charges of commuption in the top leadership and rising fears about the drift of foreign affairs.

Indeed, with the possible exception of Yadin's party, there seems to be little campaign enthusiasm. The Labor Party's slogan that it is the best "despite everything" can hardly be described as inspiring.

With 120 seats in the Knesset (Parliament) a party or coalition of parties needs 61 seats to rule. In the last election, Labor won 51 seats to Likud's 39 and therefore had little difficulty putting together a coalition government.

This time around, however, if Smith's predictions are correct, Labor may not win more than 44 seats, which would not represent an impressive mandate with which to form a government.

Labor's most likely coalition partner remains Yadin's party, which Smith predicts will win 15 seats. In addition, Labor may try to persuade its traditionally, the National Religious Party, into a coalition. But since Labor kicked it out of the last coalition, the party has drifted so far to the right that it would find the right-of-center Likud party a more comfortable bedfellow.