Supreme Court Associate Justice William H. Rehnquist remained in George Washington University Hospital yesterday following an adverse reaction to a drug prescribed for a chronic back condition.

But hospital officials said he is now listed in "good" condition and may go home as early as Sunday.

Rehnquist, 57, was admitted to the hospital a week ago, and on Wednesday suffered a drug reaction that caused "disturbances in mental clarity" and distorted his perceptions of reality for a short time, according to a spokesman for the hospital.

Dr. Dennis O'Leary, the hospital's dean for clinical affairs, said Thursday that Rehnquist had gone through short-term drug withdrawal symptoms after physicians reduced the heavy dosage of a prescribed painkiller that Rehnquist was taking for lower back pains that have bothered him for 10 years.

O'Leary refused to say what kind of drug Rehnquist was taking or how long he had been taking it, but he did say the justice was receiving 24-hour nursing supervision in the hospital.

Since the court began its 1981-82 term in October, Rehnquist has appeared to have had difficulty speaking from the bench during the court's oral arguments, and he has slurred his words occasionally.

O'Leary confirmed Thursday that the speech problems were related to the drug, and he said Rehnquist was hospitalized because of "a need to revise and relook the drug management of the problem."

In spite of the slurred speech, there has been no indication during court sessions that Rehnquist's intellectual abilities have been impaired and no suggestion that his back ailment will force him to leave the bench.

O'Leary stressed that the drug reaction was temporary and that Rehnquist's mind was "absolutely clear."

The justice injured his back in February, 1977, and was hospitalized for a week and put in traction. He was absent from the court for three weeks.

He said at the time he felt back "discomfort" one day after jogging a mile and playing table tennis.

His current illness has not caused him to miss Supreme Court sessions, because the justices are on a four-week holiday recess and will not reconvene until Jan. 11.

Rehnquist, considered the most conservative of the Supreme Court justices, was appointed in 1971 by President Nixon.