The tiny, violence-torn Republic of El Salvador had become the testing ground for an unorthodox brand of last-minute U.S. diplomacy that the Carter administration hopes will prevent civil wars and communist takeovers from rippling through the fragile governments of Central America.

In contrast to the distant and frustrating crises in Iran and Afghanistan, El Salvador is much closer to home. It is a place where U.S. influence always was present and still has some chance to work. "But the tragedy," says one State Department official, "is that it's 10 minutes to midnight. We are coming in so late" with a new policy.

Should El Salvador fall to extremists, it could not help but unsettle neighboring Guatemela and Honduras, State Department officials argue, in a Central America version of the falling-domino theory.

Whether the shock waves would drift across the Caribbean Sea to some of the young Caribbean republics now also facing leftist upheavals -- but for different reasons -- is unclear.

Either way, upheaval throughout the U.S. backyard is clearly exploitable by the Cuban communist government of Fidel Castro.

The region, one official says, "is America's Balkans," an allusion to the tinder-box area of southern Europe that exploded into World War I.

Thus, the stakes, as Washington now sees them, are very high and they are undoubtedly compounded by the feeling that a new setback in Central America, coming on top of the difficulties in Iran and Afghanistan, might be doubly hard to digest.

The U.S. strategy involves openly stated support for the beleaguered and controversial five-man military-civilian junta now governing El Salvador.

Though the junta has been unable to win much support or confidence among the various factions of Salvadoran society, White House and State Department officials believe this government is the best -- indeed, the only -- long-term hope that civil war can be avoided, social change absorbed and a moderate course preserved.

This assessment and Washington's support, however, are coupled to intense U.S. pressure on the military members of the junta to broaden its political base, carry out truly revolutionary land ownership and banking reforms, and stop the killings being done in the countryside by elements of its armed forces in the name of reform.

This plan has put the United States in the unusual position of advocating overturning a wealthy land-owning class -- the traditional small wealthy elite that has pulled the power levers in El Salvador for four decades -- and nationalizing the banking system that is the key to its control.

It is also has put the United States in the position of coaxing the junta to make contacts not only with the more moderate business interests and popular organizations, but also with nonviolent groups of the political left whose support would be necessary to forestall an extremist takeover.

Some officials here say a lesson must be learned from the U.S. experience in Iran, where this country's failure to have contacts with various left-wing dissident groups opposed to the shah eventually left the United States with no influences in controlling revolutionary events.

Both of these tactics are sharply opposed by many conservative U.S. lawmakers and organizations as policies that will turn El Salvador toward socialism and play into communist hands.

The administration, however, argues in effect that the small, rich oligarchy is finished in El Salvador; that social change is inevitable and that the only realistic course for Washington is to roll with it, trying to channel it into a moderate course in which extremist solutions of both left and right are rejected.

"With the encouraging exception of Costa Rica," Deputy Assistant Secretary of State John Bushnell recently told Congress, "Central America is in the midst of a difficult and complex transition. The old order is disintegrating under a combination of endemic problems, popular revolutionary pressures and destabilizing external influences ranging from Cuban subversion to rising oil prices. But if the old order is passing and alternative balance has yet to emerge."

Even the Cuban connection to events in El Salvador is being handled in an unusual way by the Carter administration.

Bushnell and Secretary of State Cyrus R. Vance both invoked the Cuban threat on Capitol Hill last month at a time when the administration wanted to win approval for a small package of military aid to the junta.

But in private, top State Department officials and U.S. diplomats on the scene play down the Cuban role.

Cuba, they say, is important to a degree but not decisive. Clearly, Havana helps train the leaders of the Marxist guerrilla bands that want to overthrow the government and it exploits turmoil everywhere it can. But, these officials acknowledge that there is little evidence to support allegations of a heavy supply of arms from Cuba.

The Salvadoran Marxist have a warchest of their own, estimated at $60 million, from kidnaping wealthy landowners -- enough money to buy all the arms they need, officials claim.

In effect, these diplomats argue that too much focus on the Cuban role takes the American eye off the real problem of insurrection sparked by severe social problems and malaise among El Salvador's 5 million, mostly poor, inhabitants.

"My opinion," says one experienced U.S. diplomat in the region, "is that if Cuba didn't exist, it wouldn't make a helluva difference."

Aside from the new policy lines, a major personal ingredient of the new U.S. strategy in El Salvador was the dispatch early last month of Robert White, a 50-year-old career diplomat with extensive experience in the region, as the new U.S. ambassador.

White is a controversial diplomat who angers many conservatives. He is an outspoken and articulate advocate on human rights whose appointment was meant to signal liberals and the junta in El Salvador of a new tilt to the U.S. position. He replaced an ambassador who was generally viewed as not placing much pressure on the junta to carry out the reform programs.

White's public outspokenness is meant to make clear both U.S. support and expectations. The Salvadoran military feels that if there is no clear U.S. support, there would be nothing to replace the oligarchy, from which previous military governments derived their support, and Marxist extremists would grow bolder.

The junta took power on Oct. 15 in what is described by U.S. officials as a progressive revolution carried out by a group of young military officers who seized power from the military dictator, Gen. Carlos Humberto Romero, and threw out some 75 senior army officers.

The first attempt at a coalition with liberal democrats disintegrated around year end when all civilians resigned in protest over military actions. The civilian gap was filled early this year when Christian Democrats joined the government.

Soon after that, in March, the reform programs were begun under heavy pressure from the United States.

Whether this will succeed before the violence of the extreme left and right -- which has already claimed hundreds of lives -- propels El Salvador into all-out civil war is far from certain, U.S. officials acknowledge.

Yet the fledgling government did survive two crises within 10 days in March: the assassintation of liberal Archbishop Oscar Romero allegedly by extreme right-wing forces, and the chaos and killing at his funeral allegedly instigated by left-wing extremists.

Both allegations are theories held by some U.S. officials.

In the aftermath of those incidents, one experienced official guessed that "if the center can continue to hold over the next couple of months, we'll be on our way."

As seen in the eyes of White and others, the land and banking reforms cut the ground out from under the left-wing extremists, who are trying to bring down the junta for that reason, while the right-wing extremists want to bring it down in order to reestablish the old system of privilege.

The paradox of the U.S. position is that its objective of a moderate and nonviolent future for El Salvador is based largely at the outset on the military, which still is viewed by many Salvadorans as a force of repression. That is why there is such heavy U.S. pressure on the liberal officers of the junta to purge the elements of the military still allied to the rich and previously ruling elite.

Aside from violence by leftist guerrillas, the major share of the terror killing in the country side is attributed to elements of the national guard, a special treasury police force and some military units that either engaged in violence or failing to put it down.

The central role of the young colonels in the junta in eventually reforming the military as well as broadening the junta's political base is also why the Carter administration fought so hard in Congress in recent weeks to get a $5.7 million military assistance bill approved.

The bill provides trucks and communications equipment, but no weapons. Still, it was bitterly opposed by members of Congress who felt it was dangerous to provide such assistance "to gross violators of human rights" and that it would make it harder to broaden the government's appeal.

The administration, with the help of the Cuban argument, prevailed. U.S. officials also argue that the aid package is far more significant as a symbol of U.S. backing for the plans of the junta rather than as military equipment.

"If you eliminate the army in El Salvador," one official says, "then nothing stands between the armed left and a government takeover."

At one point the United States also suggested sending so-called military training teams, small squads of specialists, to help train the Salvadoran soldiers. Pentagon officials said such teams could be useful in controlling the violence, since many Salvadoran soldiers now know virtually nothing about firing discipline and tend to fire indiscriminately.

When the proposal surfaced in the press, however, both the Salvadorans and the State Department, fearing that dispatch of the teams would be politically dangerous and invite charges of U.S. military intervention, shelved the idea.

The new shape of U.S. policy is not to give the military the ability to crush the left because it is believed here that the Salvadoran military frequently is unable or unwilling to distinguish between moderate social democrats and Marxist terrorists.