President Hafez Assad of Syria has gained the upper hand over the most serious challenge to his military-backed government in the decade he has ruled this country. But it has required an extremely brutal repression whose long-term effects on his popularity and hold over power remain to be seen.

"Syria is now stronger than at any time before," said Ahmed Iskandar, the feisty information minister and member of the ruling Arab Baath Socialist Party's Regional Command, which is in effect the party's Syrian branch.

Western analysts of Syrian politics here seem to agree that Assad is back firmly in control, if not at the height of his strength and popularity, after a rocky six months of antigovernment strikes, demonstrations and above all assassinations carried out mostly by extreme Moslem fundamentalists.

"At the moment, he is looking stronger than he has for some time," remarked one such analyst.

Altogether, at least 500 supporters of Assad's government and 1,500 to 2,000 of its opponents have been killed, according to rough Western estimates, in a spiraling cycle of violence in the last 18 months that culminated in a grenade attack on the president in late June from which he emerged unscathed but reportedly shaken.

On the eve of the Moslem Aid al-Adha five-day festivity here, the city was calm and bustling. But watchful civilian security guards, toting AK47 assault rifles, still stand guard outside the homes of many senior Syrian officials in the European-style residential Malky District of the city -- a sullen reminder that peace still has not altogether returned to this land.

In fact, the government admits to "daily incidents," some initiated by antigovernment terrorists but most now by the Syrian security forces swooping down on suspected safe houses of the small but determined armed bands responsible for the hit-and-run attacks on party, government and security force members.

Opposition to Assad's rule is led by the Moslem Brotherhood and other Sunni Moslem fundamentalist factions that oppose both the rule of the Alawite religious sect to which Assad belongs and the lay, socialist goals of the Baath Party. About 12 percent of Syria's nearly 9 million inhabitants are Alawites and 70 percent Sunni.

But the opposition has not been just a sectarian affair. Professional groups, such as lawyers, doctors and teachers, had their unions dissolved last March after they called for greater freedm. On the other hand, there are many Christians and Sunnis in top government, Army and party positions, although the key ones tend to be tightly held by Alawites.

The government itself has given the opposition a sectarian tone by blaming it principally on the Moslem Brotherhood, which it claims has been financed, trained and armed principally by "those who speak Arabic in Amman and Baghdad," as Iskandar put it in an interview.

Other outsiders charged with aiding the brotherhood in the endeavor to overthrow Assad include the Christian Phalangists of Lebanon, Isreal, Egypt and the United States. Iran, whose Shiite revolution under Ayatollah Ruhollah Khomeini helped stir the brotherhood into renewed activity across the Moslem world, is never mentioned as responsible party.

This can be explained by Syria's burning feud with Iraq and clear symbathy for Iran in the war between those two nations and partly, too by the fact that the Alawites are cousins to the Shiites in Islamic genealogy.

After months of indecision, Assad began an all-out campaign last March to crush his opposition. This included the sealing off of whole cities, such as Aleppo and Hama, systematic house-to-house searches, and a number of indiscriminate killings of civilians in retaliation for assassinations by the brotherhood or simply as a warning to the local population.

The worst of these massacres recounted by reliable Western sources occurred in late August in Aleppo. There, security forces reportedly dragged 80 men from their homes, lined them up and shot them following the assassination of four government guards.

This "object lesson" may well have been also a settling of accounts for a similar massacre of more than 50 mostly Alawite cadets at an Aleppo military academy by antigovernment elements in June 1979, an event and date that marks the beginning of open warfare between the Assad government and its enemies.

The crackdown has been carried out prinicipally by two key Praetorian Guard bodies, the Defense Companies under the command of Assad's brother, Rifaat Assad, and the Special Forces headed by Ali Haidar. Together, they number 40,000 men and are equipped, among other thngs, with the latest Soviet T72 tanks.

But Assad has also used the Army and Baath Party milita. These three traditional pillars of his government -- the Army, party and security forces -- have remained loyal and largely unreceptive to the Moslem Brotherhood appeal.

The security forces are now mostly on the offensive, their intelligence seems much better than at first and their methods are effective in killing or capturing a large number of Moslem Brotherhood armed partisans, a Western resident said.

"But it has been a very brutal repression," he added.

One indication of the government's renewed confidence is its decision to allow Western reporters, who have been banned for months, to return here. But they are being kept under strict supervision and travel outside Damascus to trouble spots such as Aleppo is for-bidden except with special permission and a government guide.