AS GOVERNMENT operations go, the Consumer Product Safety Commission is quite small. Its current budget ($40 million) is about one-fourth of that being sought to modernize and reactivate the battleship New Jersey. Yet this commission is now caught in a fierce struggle on Capitol Hill between those who support the administration's desire to dismantle it and those who want to salvage it.

The CPSC, like some of those other bold initiatives of the 1960s and early 1970s, was assigned by Congress the monumental task of producing rules and standards that would reduce the number of people who are killed or injured by consumer products. The chairman of the presidential commission that recommended its establishment in 1970 said an effective agency could prevent as many as 4 million injuries and 6,000 deaths each year.

In its early year, the CPSC did little but get into trouble. Many members of the staff, which it had inherited from other agencies, and some of its commissioners were unwilling or unable to carry out its mandate. The commission floundered, issuing rules that were sometimes unintelligible and spending its money in weird ways. Not until late 1978 -- after Congress had forced one chairman out of office and three new commissioners had been added -- did the agency begin to get its act together.

Since that time, the commission's performance has improved, and there is now hope that it can have a substantial impact on safety around the house. The standards it has set, for example, on baby cribs and portable gas heaters will save lives. Like the Federal Trade Commission, the CPSC seems to have learned over time the proper role for government regulation.

What it to be gained by dismantling the commission now? Very little, in our view. The job it is supposed to do would either be crammed into the Commerce Department or be broken up and dispersed among several agencies. Either way, the setting of safety standards would become a secondary task in a bureaucracy concentrating on other matters. That's what the situation was before the CPSC was created.

The real issue is whether Congress still believes, as it did in 1972, that the federal government should make a serious effort to improve the safety of products. The record indicates that, if government tries, it can make life safer for everyone at a much faster rate than will be achieved by leaving safety in the hands of businesses. The Consumer Product Safety Commission deserves a further chance to demonstrate that it can do that job.