In a dramatic reversal of most political predictions, the two-year-old Australian government of conservative Prime Minister Malcom Fraser faces the prospect in the Dec. 10 national election.

Helped by the Bert Lance-like resignation in mid-campaign of Treasurer Phillip Lynch and a Fraser policy offering little more than a continuation of austerity and high unemployment, Labor Party leader Gough Whitlam is posed for one of the most remarkable comebacks in Australian political history.

A left-wing reformer who describes himself variously as a socialist or social democrat, Whitlam, 61, led the country from 1972 until November 1975 when Queen Elizabeth's Australian representative, Governor-General Sir John Kerr, fired him after he had failed to get the Parliament to finance his programs.

Fraser's conservative coalition of Liberal and Country parties had used their majority in the Australian Senate (Whitlam's Labor Party controlled the more powerful House of Representatives) to block the budget.

In the December 1975 national election that followed Whitlam's unprecendented dismissal, Fraser led his coalition to the largest victory Australian politics had ever witnessed.

Whitlam was dispirited and seemed finished as a political force. Six months ago, he was challenged for party leadership by its parliamentary economics spokesman, Bill Hayden, and survived the challenge by only two votes.

Now it is Fraser who is dispirited and in trouble. His problems have been exacerbated by the continuing stagnation of the Australian economy, which he had promised to put into sound order in 1975 in the one campaign pledge responsible more than any other for his huge victory.

When Fraser announced the new election last month - a year earlier than the Australian constitution required - not even the most fanatical Labor Party supporter believed there was any chance of winning.

Labor saw its fortunes suddenly snap around in a series of unexpected press revelations that for Fraser were almost a mirror image of President Carter's problems with Bert Lance.

Since 1973, Philip Lynch, 44 had been deputy leader of Fraser's Liberal Party. When Fraser became prime minister, Lynch became Treasurer, his leader's right-hand man and the toughest proponent of a tight, conservative economic policy.

Lynch was also the only Irish-Catholic in a senior post in Fraser's Liberal Party, a protestant-dominated organization with a traditionally puritanical underpinning. He was also a man who got himself to the top rungs of Australian politics from a poor background, through scholarships, talent and hard campaigning in a party led by men of comfortably inherited wealth.

When Lynch began to slip, then, there were few who tried to help.

First, it was revealed that a Lynch family trust had bought large tracts of land four years ago and sold much of them last year - while Lynch was treasurer. The trust had used a complex legal arrangement to net the Lynch family more than $80,000, spread in such a way through family trusts as to minimize his tax liability.

Last year, while he was preaching an economic philosophy of tight belts and little comfort to Australia's record army of unemployed, Lynch bought two penthouse apartments in a northern Australian millionaire's sunstrip.

It appears that he almost immediately put one on the market at a tax-free profit of about $20,000 and bought other on favorable terms that will probably enhance his estate considerably. There was nothing illegal or improper about all the Lynch transactions but their disclosure was devastating politically for Fraser, who demanded and got Lynch's resignation as treasurer 10 years ago.

Like Lance, Lynch had been unwise. Unlike Lance, Lynch appears to have been quite shrewd in all his private financial dealings and have put himself into a very sound financial position.

The Lynch departure was bad news for Fraser on two other grounds. Lynch was and still is in the hospital, recovering from surgery for kidney stones and Fraser's tough approach toward Lynch did not win him any votes from an electorate that feels that prime ministers should be considerate, if not loyal, to those who are loyal to them.

Fraser's other problem was that much of his campaign had been based on warning Australians of the dangers of returning Whitlam to power on the grounds that the Whitlam government had been reckless with the nation's money to the extent that he had been forced to fire two of his treasurers.

Whitlam played the issue shrewdly. A briliant campaigner at his peak, he said little about the Lynch affair but instead projected himself, 14 years older than Fraser, as the experienced and now much wiser statesman who is thoroughly competent to run the country.

Since the Lynch resignation, opinion polls have shown Labor about 3 per cent ahead of Fraser's coalition.

Fraser's best hope in the last two weeks of the traditionally short campaign is that another Australian tradition will hold firm-a normal drift back to the conservatives in the last week or so of every national election.

Meanwhile, a former Liberal minister, Don Chipp, has broken away from the party and started a small liberal movement called the Australian Democrats. Chipp's main objective was to win himself a seat in the Australian Senate, but his appeal against the rigidity of the two major party groups and his appeal for integrity in government has struck a responsive chord.

His movement is winning upwards of 10 per cent of the vote in nationwide polls and it could decide the election because of the complex Australian system of preferential voting.