Prime Minister Anker Jorgensen today began forming a Social Democratic minority government and drawing up a plan for tackling Denmark's economic crisis to present to Parliament when it reconvenes early next month. He will present his new Cabinet to the queen Friday.

Jorgensen's Social Democrats increased their seats in the 179-member Parliament from 65 to 69 in Tuesday's national election. They now must attract support from other parties for drastic measures, including some kind of wage freeze, to stop the spiralling inflation here that is pricing Danish products out of world markets.

Jorgensen believes his chances have been improved by the increased strength in Parliament of all five "traditional" Danish parties: the Socialist Peoples, a Marxist party supported by younger voters; the Social Democrats, supported by Denmark's powerful labor unions; the Radical Liberals, supported by academics and professionals; the Liberals supported by farmers and the middle class; and the Conservatives, supported by business and the middle and upper classes.

Meanwhile, the half dozen splinter, single-issue and protest parties lost support and representation in Parliament.

These protest parties spawned during the 1970s by voter frustration with chronic economic problems that threaten Denmark's high standard of living, threw Danish government into confusion in 1973 when they suddenly won more than a third of the parliamentary seats in Denmark's proportional voting. This system awards seats to any party winning more than two percent of the total vote. In Tuesday's election, Denmark's fourth in just six years, the protest parties won less than a fourth of the seats.

"This Parliament should be more functional," Jorgensen said. "This election was good for Denmark."

In what Danish officials refer to as "the good old days before 1973," the five traditional parties held all the seats in Parliament.

"They ran Denmark, passing the most important legislation almost unanimously," said history professor Tage Kaarsted of Copenhagen University.

They created and expanded Denmark's generous welfare state, which was financed by exports of quality products and modern design during the postwar economic boom. But with the 1970s came a worldwide slowdown and soaring oil prices.

Because this small Scandinavian nation of 5 million people lives on trade and imports more than 95 percent of its energy, it was hit particularly hard. Inflation, unemployment, budget and trade deficits, welfare state costs and already high taxes all increased almost beyond Danish belief.

Out of the disillusionment came the protest parties: a party against income tax, a utopian party for taxing profits from inflated land values, a party of property owners against that tax, a Christian party against abortion, and splinter parties on the socialist left that were against each other.

Suddenly, there were eleven parties in Parliament after the 1973 election. They were often at each other's throats, making it almost impossible to take strong measures to cope with the growing Danish economic crisis.

Even when a majority could agree on something, said Uffe Ellemann Jensen, parliamentary policy spokesman for Liberal Party, "the machine moves very slowly to build a consensus. It is necessary to listen to and satisfy 11 different views every time."

The symbol of this political frustration became burly tax lawyer Mogens Glistrup, founder of the Progress Party, which wants to abolish all income tax and eliminate most of the welfare state bureacracy.

But in Tuesday's election, the Progress Party slipped from 15 to 11 percent of the vote and from 26 to 20 seats in the Parliament.

The Progress Party's decline could be attributed to internal quarrelling about how uncompromising it should be in its demands or to Glistrup's conviction last year on charges of gross tax evasion and fraud. Pending appeal is a court order that they pay $1 million fine and back taxes. But the other fringe parties also lost support, and one communist splinter party lost all its seats in Parliament.

"The protest movement has now gone through all of Danish society since 1973 and may be losing its appeal," suggested Asger Schultz, who runs the Gallup polling organization in Denmark.

Meanwhile, Prime Minister Jorgensen's problems remain formidable. The unions on which his party is based will fight a wage freeze unless it is tied to a mandatory profit-sharing scheme enabling employees and unions to buy partial control of Danish firms.

This demand, in turn, will be opposed by the Conservatives, Liberals and Radical Liberals, who fear a union takeover of Danish industry. They might, however, compromise on a voluntary profit-sharing scheme.