Antonio Alvarado, 32, held the chalk awkwardly but firmly in a hand scarred from years of working Nicaragua's dusty soil. On a shaky canvas blackboard nailed to the wall of his shack, letter by laborious letter, he scrawled his name.

Alvarado smiled broadly, proudly. It was less than a month since a volunteer teacher came to his home and showed him how to read his first word: "revolution." Now Alvarado can sign his name and sound out such sentences in the basic government-supplied primer as "The violin is new" and "The guerrillas vanquished the genocidal National Guard."

Alvarado, his wife Maura and half a dozen of their relatives who live here near the fields of Mateare are among 600,000 peasants and laborers currently being taught to read and write by Nicaragua's 10-month-old revolutionary government.

The literacy crusade, as it is called, is the most ambitious project yet undertaken by the Sandinista-led government. It represents, the revolutionary leaders assert, the best aspects of the government that overthrew dictator Anastasio Somoza last July. To critics of the government, the effort represents a means to achieve Marxist totalitarianism.

The plan calls for the virtual eradication of illiteracy in five months in a country where, until the crusde began in March, more than 50 percent of the adult population could not read or write.

The parallel goal of the campaign is political and social indoctrination, mingling history of the revolution with maxims and slogans designed to shape what is commonly called the new Nicaragua.

Despite the virtual bankruptcy of the post-civil war economy tremendous resources have been diverted to the literacy campaign. The estimated final cost is $20 million. A month into the crusade, $3.7 million had been raised, mostly from European contributions.

With such a shortage of funds, what keeps the campaign going is an extraordinary level of popular commitment. Posters, billboards, even matchboxes proclaim "Literacy is Liberation" and virtually no one here seems to doubt it. The fervor that went into ousting Somoza has been channeled into this second revolution of reading and writing.

In a nation of perhaps 2.5 million people, about 180,000 have volunteered to teach. At times the campaign seems a children's crusade. More than 60,000 of the teachers are high school and college students who have been trained during the last several months to teach reading and writing. Some of these instructors are as young as 11 years old.

The teachers go to factories and farms, sometimes into areas so remote that the nearest road is a walk of several hours. The idea is that by living among peasants and laborers, the city-bred and often sheltered young people will gain a greater appreciation of the harsh realities faced by most of the population.

Parents must give permission for their children to take part, and the volunteers are supposed to be under scrupulous protection. But the logistical problems are so enormous and funds so short that sickness and lack of basic supplies among the young teachers is frequently reported in the hinterlands.

Some teachers have been threatened by ultraleftists opposed to the leftist but pragmatic Sandinista government and common criminal assaults are a risk.

The government denies that any serious incidents have taken place but Interior Minister Tomas Borge, in an impassioned speech last month, called for the execution of anyone convicted of assaulting a teacher. Officially capital punishment is not allowed here.

Jose Ramos Pavon, 16, contracted malaria while teaching with 17 other Managua high school students in the mountains near Matagalpa. His mother and father had to walk for three days to find him and bring him out.

"There's no communication with the outside world," Ramos said. "Three of us caught malaria. Others have swollen glands, bronchitis."

For all that, Ramos was happy with his experience.

"I learned a lot," he said. "The peasants are very sweet people. They showed me how they burned off their land before planting and how they will sow the fields."

"But I also learned how much they don't know. Their only food is rice and beans. They've almost never had anything else. They don't even know how to wash vegetables. The majority of peasants don't believe in microbes. They don't even know the word. Many of them are very sick. But they are trying to learn and they are very enthusiastic."

The basic goals of educating both the teachers and the pupils have met with little criticism. It is the content of the lessons that has raised a storm among opponents of the Sandinistas such as former junta member Alfonso Robelo.

They see the crusade as compromised by Sandinista propaganda. These critics note, for instance, that while "bourgeois" and "imperialism" are part of the basic text, "pluralism" and "elections" are nowhere to be seen. a

The most vocal critics tend to come from what is left of the middle and upper classes, and they object to such reading exercises as, "The popular Sandinista revolution initiated true democracy. The privileged classes are finished."

The Sandinistas make no apologies for such lessons, arguing that they appeal to the basic sentiments of the peasants and workers. A frequent refrain is that keeping people in ignorance, as Somoza did, is a political act. Therefore teaching them to read is also political.Why not take advantage of it to help fortify the revolution?

Architects of the campaign argue, moreover, that when everyone knows how to read there will be a greater chance of establishing a well-informed electorate and a workable democracy.

Among the peasants and workers here in Mateare the fears of the campaign's critics seem distant. Antonio Alvarado and his family appear less interested in the political content of what they read than in the fact they can read it.

"Now that I can do this," said Maura Alvarado, "nobody will be able to take advantage of me."

Ignacio Salinas, a quiet laborer in a nearby machine shop, said, "I want to read because I don't want to be a person who knows nothing. I want to go ahead with my life and make it better."

Alvarado, 27, said he does not really know very much about the Sandinistas "but happily now I will be able to read more about them. I don't want to learn only about them, though. I want to learn a little bit about, well, everything."