El Salvador's extreme left has stepped up its attacks against private businessmen and government officials based on an apparent conviction that the military-based conservative government is growing weaker.

Encouraged both by July's guerrilla overthrow of Anastasio Somoza in Nicaragua and their own recent success in drawing worldwide attention to El Salvador as another potention Central American powderkeg, Salvadoran guerrillas appear to be trying to provoke government repression.

At the same time, more moderate opposition groups, which fear they will lose the initiative to extremists in the battle for social and political change have formed a coalition demanding reforms.

Tuesday's firebombing of the presidential compound in El Salvador, allegedly by leftist guerrillas, was only the latest in a series of increasingly frequent attacks.

At least four persons were killed and numerous others wounded when government police retaliated by spraying machine gunfire into a rush-hour crowd outside the palace grounds.

According to wire services, there is still no news on the fate of two American electronics firm employees kidnaped Friday. Dennis McDonald, 37, who heads a Salvadoran subsidiary of the California-based Bechman Instruments, and Fausto Bucheli, the firm's engineer, were seized at the international airport. Their chauffer was killed in the attack.

No ransom has been demanded yet.

Meanwhile, approximately 100 members of a peasant-labor coalition called the League of 28 continue to occupy the Labor Ministry building in San Salvador. The group, so named after an alleged government massacre that took place Feb. 28, 1977, seized the ministry last Thursday and have vowed to stay inside until the government tells them where three of their missing leaders are.

Such actions have been common tactics of El Salvador's militant opposition groups in the past. In recent weeks, however, both the number and the frequency of the attacks have increased.

Perhaps more significantly, guerrilla groups in the past week have launched a series of attacks on Salvadoran military installations. Up to now, the tactics of all three of El Salvador's leftist guerrilla groups concentrated on kidnapings and selective hit-and-run assassinations of government officials and military figures.

The rightist government, controlled for nearly five decades by the military through armed repression, fraudulent elections and the support of an ultraconservative economic elite, is on the defensive.

It's biggest ally, the United States, is currently bringing strong pressure for reform in an effort to prevent El Salvador from turning into another Nicaragua. At the same time, the implications for the rest of Central America of July's guerrilla overthrow of fellow rightest Somoza have not been lost on El Salvador.

As the situation intensifies, each political sector, including the government feels increasing pressure and a sense that the time remaining before an all-out insurrection erupts is growing short.

The government has responded by announcing a series of electoral reforms and promises of political freedoms. At the same time, however, it has begun transferring large amounts of money into the defense budget from social welfare programs.

Disparate elements of the non-guerrilla opposition are attemping to join forces. The leading Christian Democrats, union federations, mass groups like the League 28 and others on Monday announced the formation of a joint platform to confront the "national problem" -- violence.

It includes demands for the dissolution of the government's secutiry appartus, including paramilitary terrorist groups like the White Hand and White Warriors Union the opposition charges operate under government leadership; the end of repression against unions, parties and the church, free right of organization, liberty of thought and expression, and the release of political prisoners whose numbers human rights organizations estimate in the hundreds.

The opposition political parties have also made the same demands as conditions for their participation in local elections scheduled for next March.

Both political extremes, -- the government and the guerrillas -- are clearly opposed to such concessions.

For the government, they would mean the dismantling of a system of corruption and control built up over the past 50 years, as well as the much feared possibility of giving power to the left.

For the guerrillas, they would mean the interruption and possible defusing of a steamroller drive toward a Marxist state that is now fueled by the intransigence and repression of the government itself.