The ragged hills around the gray border village of Crossmaglen in British-ruled Northern Ireland are called "bandit country" by British soldiers patrolling against the Irish Republican Party.

Over the past 10 years, 150 British troops have been killed or wounded there in IRA attacks, usually organized from across the nearby frontier with the Irish Republic.

Maj. Charles Stephens, deputy commander of Britain's Welsh Guards Army regiment had just returned from patrol to the muddy fort where nearly 100 of his men have spent the last four months on virtually around-the-clock duty. Looking out onto the small village of 2,000 Catholics and one Protestant, he said, "The reality is that we are at war here."

British soldiers' war posture in an IRA border stronghold is not representative of the province of Ulster as a whole, where many people lead normal lives. But it is one of many grim factors that combine to defy current political maneuverings toward peace by the British and Irish governments and make a solution to the Ulster dilemma as distant as when the British first imposed direct control to prevent civil war in 1972.

With three soldiers and an armored personnel carrier, Capt. Robert Mason, three years out of Oxford University, patrolled Crossmaglen the other day. As villagers stared, only to turn away as he passed by, Mason pointed out to a reporter each corner, house and alley where a British soldier had fallen. t

"If I were short right now, not one of them would help me," Mason said, "either because they support the IRA or are afraid of being punished later for sympathizing with us. Last year three soldiers were shot here, and the local priest refused to give last rites to one of them who was a Catholic. He died on the street."

Yet every major opinion poll in Northern Ireland has shown that continued direct British rule is the only form of government acceptable to both a majority of Catholics and a majority of Protestants. There also is little doubt in the minds of police and soldiers interviewed recently that British withdrawal would lead to civil war in which the Catholic minority would suffer.

British army officers, who asked not to be named, said they would particularly worry about the conduct of the overwhelmingly Protestant 7,500-man provincial militia, called the Ulster Defense Regiment.

"If I were a Catholic I wouldn't trust the militia myself," said one British officer.

Neither the British nor the Irish government has yet found a way to solve the persistent problems that make North Ireland a divided and improverished land with no consensus upon which to govern itself. Britain spent nearly $2 billion last year supporting Ulster's economic and social welfare, but ther is little sign of improved conditions.

The province suffers from the almost uniquely debilitating combination of a declining 19th century industrial base and sectarian hatred between the Catholic minority and dominant Protesant descendants of former British colonists. Relations between the two communities deteriorated into open violence in 1969 that 11 years later is wearily referred to as "the troubles" in both Britian and Northern Ireland.

The nearly 12 percent unemployment rate is twice that of Britian. Because of deeply imbedded sectarian discrimination, Catholics, according to official statistics, suffering 2 1/2 times the Protestant rate of unemployment, reaching 40 percent in some Belfast Catholic sections.

The lastest report of the Fair Employment Association of Northern Ireland, created by the British to prevent religious bias in hiring, concluded that sons of Catholics are much more likely to move down the social scale from the position occupied by their fathers, than are the sons of Protestants.

In the working class ghettos of West Belfast, frequent sites of sectarian riots and killings, Protestant and Catholic neighborhoods face each other across derelict, burned out buildings, white-painted boulders and walls of tin sheeting design to keep people apart.

Protestant taxi drivers do not willingly drive to Catholic ghettos, and an American visitor is advised to speak in a broad accent to emphasize his non-British origins.

"The people of Belfast have grown more separate, more entrenched in their ghettos," Father George Wadding, a priest working in the poverty-stricken Catholic Falls Road ghetto, said there recently. "Ten years ago people used to mix freely here."

Terrorist killings have fallen drastically in recent years from a peak of 467 in 1972 to 113 last year -- fewer people than were murdered in London or most major American cities. But the IRA concentrates now with considerable effectiveness on attacking only policemen, prison officers, soldiers and "prestigue targets" like Lord Mountbatten who was assassinated last summer.

Dungannon, 40 miles west of Belfast, is the most frequently bombed town in Northern Ireland and its center is now sealed to traffic to prevent IRA bombs being planted in parked cars. Four British soldiers were killed when an IRA land mine was detonated under their Land Rover last December. Now the British regiment, like the Welsh Guards on the southern border, patrols only by helicopter or on foot.

Technically the British Army is in Northern Ireland to support the civil police under "special powers" that must be reapproved every six months by the British Parliment. But the police have long been considered, despite public relations efforts, as virtually a Protestant militia by Catholics and are prime IRA targets. They do not enter many Catholic areas.

Under the "special powers," suspected terrorists are tried only by a judge since juries are thought to be too easily intimidated.Since no one will publicly give evidence in such trials for fear of later retribution, convictions rest exclusively on confessions supportedly given to the police.

But after strong criticism last year following an official inquiry into allegations of torture, there now are strict procedures governing the questioning of suspects.

"A man arrested for terrorism here is better treated than a drunk would be in London," Maj. James Middleton said pointing out faces in a gallery of mug shots staring from his office wall. "I can't get evidence that will stand up in court. It's crazy to run this country as if it were a normal democratic society."

British civilian officials do not yet share this view. They speak of an "acceptable level of violence" now in Ulster and fear that greater restriction of civil rights could lead to abuses and further alienation of the Catholic minority. "We want to keep some of the basics of British law going," said one official, "and we reckon the law is now working in Ulster."

The British commander of an army regiment in Belfast, who has had two past tours in Ulster, talked last week of his desire and attempts to get the civil police to patrol the streets instead of the Army, but said he had failed because "the police are afraid of being shot and do not want use to leave." But, he said, "there is no military solution in Ulster -- the problems must be solved at the political and social level."