THE CONFRONTATION between The New York Times and the courts of the State of New Jersey raises, in a costly and painful way, the question of whether news organizations and their representatives will be able to continue the practice of guaranteeing anonymity to sources of confidential information.If The Times loses on the basic principle for which it is fighting, it will not be just a matter of a particular confidence breached, or a particular source betrayed. It will be a signal to all potential sources of confidential information on sensitivie matters having to do with alleged wrongdoing that their confidences are no longer safe. And if that signal goes forth, the real loser in the long run will be the public because of the inhibiting effect on the free functioning of the press.

The Times and one of its reporters have been found guilty of criminal and civil contempt of court for refusing to turn over to a trial judge the notes the reporter made during his investigation of several mysterious deaths a decade ago. The Times has been fined heavily ($100,000 plus $5,000 a day until it obeys the order) and the reporter sentenced to jail as well as fined. The judge says he must inspect those notes to determine whether anything in them might be of aid to the defendant in a murder case. The Times and the reporter say they will not surrender the notes because promised that would reveal sources to whom the reporter promised anonymity. It was from those sources that he gained the information, published by The Times, that caused prosecutors to re-open the investigation that led to the current murder trial.

We do not know all the intricacies of this dispute. During the weeks of legal maneuvering that preceded the judge's final order Monday there may have been procedural steps that would make less than an ideal case on which to base a clear-cut constitutional decision. But we are distressed that the New Jersey courts have apparently brushed aside so lightly the principle for which The Times is fighting.

It is not a principle that is often well understood or accepted outside the news business. But it is difficult to overestimate the importance to news gathering of the right to keep in confidence the identity of informants. All too frequently, information about corruption or neglect of duty of other wrongs by government officials or private institutions or even ordinary citizens reaches the press, and thus the public, only after a reporter has promised that the source from which it comes will never be identified. That is so because those both in and out of government who are in a position to provide leads or tips - or more solid information - are often fearful of the consequences (the loss of a job, or some other reprisal) if their names become known. So they tell a reporter, in confidence, what they know about a bribe or a phony contract or a suppressed investigation - or even a Watergate.

That essential element in the process of news gathering has already been threathened by the ordeal through which The Times has gone in New Jersey. Even if The Times ultimately wins this case, the financial costs of the litigation and the strain it has put on the newspaper are likely to discourage less prosperous and less aggressive newspapers from engaging in the kind of investigative journalism that might put them in a similar position. Or, they may find they have no alternative but to yield to the pressure from the courts. In that sense, the inhibiting effect of this case may already have been felt. That inhibition will become all the more crippling if The Times loses on appeal. And if that happens, the public will have lost a vital part of the check it now has on corruption and otehr wrongdoing in and out of government.