Militant Sikh fundamentalists demanding virtual autonomy in an enlarged Punjab state are presenting Prime Minister Indira Gandhi's government with one of its most serious and potentially explosive domestic confrontations.

So far, 25,000 Sikh protesters have been imprisoned in demonstrations that began in August -- ostensibly over distribution of water in the Punjab -- and the movement's leaders have threatened to send 100,000 more into overcrowded jails in the wake of a violent clash here Tuesday. Indian security forces killed four Sikhs when they opened fire on a sword-wielding mob attempting to storm Parliament.

Leaders of the Sikhs' strident Akali Party said in interviews that they will stiffen their demands and refuse to negotiate with the government until it accepts a Sikh manifesto, redrawing the boundaries of three Indian states and giving a new, autonomous Punjab powers that no other state except Kashmir has.

"We are not demanding a Khalistan, but if the government continues to ignore our demands, the people may decide they want a Khalistan and we will have to go with the people," Akali Party Undersecretary Hardail Singh Mann said. Khalistan is the visionary Sikh nation sought by the most extreme fringe of the separatist movement.

Emotions are running so high that relations between Sikhs and their Hindu neighbors in the Punjab -- which in previous Sikh autonomy campaigns remained relatively stable -- have begun to deteriorate with clashes, growing mistrust and religious intolerance, according to moderate Sikhs and Hindus.

There have been increasing incidents of defilement of Hindu temples in Punjab. Hindus, who according to some estimates now comprise 48 percent of the state's population, have struck back with street clashes.

"The Akali Party has a long history of peaceful protest, but the situation is leading toward more violence in the Punjab," one party worker warned.

The Sikhs, a Hindu sect whose long history of militarism dates back to their ferocious battles with the Mogul rulers, appear to have gone so far in pressing their grievances that compromising now on their major demands could rupture the fractious Akali Party.

India's most prominent Sikh, President Zail Singh, has dissociated himself from the Akali movement, saying that "any willful action in promoting Sikh chauvinism in Punjab is fraught with consequences which are against the interests of the Sikhs themselves."

"It is hard to make a case that Sikhs are discriminated against," conceded one Sikh businessman, noting that they are the most prosperous and upwardly mobile of the country's religious minorities, dominating whole sectors of the economy of northern India.

For Gandhi's part, granting Punjab and its Sikhs the kind of autonomy they want could prompt similar demands from national minorities in other states and jeopardize the Indian union.

Although sensitive to the strategic and economic importance of Punjab, which borders Pakistan in northwest India and is the agricultural heartland of the country, Gandhi has stayed largely aloof, apparently hoping that if the central government remains passive and leaves responsibility for security in Punjab to state authorities, the movement will die out.

The major demands of the Akalis, a reform movement founded in the early 1900s to purify the Sikh religion of its Hindu influence, are in the party's Anandpur Resolution, adopted in 1973 and named after a shrine near the Sikhs' spiritual capital of Amritsar.

Although slightly differing versions have been advanced by two Akali factions, the main demand is for a new and enlarged Punjab state with virtual sovereignty.

The new state would absorb Punjabi-speaking areas of the neighboring states of Haryana, Rajasthan and Himachal Pradesh, making Punjab a third larger than its present area, demarcated in 1966.

Mann, who represents the Talwandi faction, said the new Punjab would redress an imbalance created not only by the 1966 boundaries, but dating back to 1953 when Hindi-speaking areas of the pre-independence Punjab were incorporated into the new state and Punjabi-speaking areas into Rajasthan.

The Akalis claim they are demanding a Punjabi-speaking state and not a Sikh state, although critics of the movement are skeptical.

The Akalis also demand that India's constitution, which Sikhs refused to sign in 1950, be amended to grant the new Punjab control of all government functions except defense, foreign relations, currency, telecommunications and railways. Similar autonomy was granted to Kashmir to keep that strategically important and contested Moslem state in India.

The Sikhs demand that Punjab's capital be moved from Chandigarh to Amritsar, site of the religious order's Golden Temple. When Punjab was divided into three states in 1966, Chandigarh was made the capital of Haryana as well as Punjab and administered by the central government as a union district.

The Sikhs also demand that:

* Punjab be granted exclusive use of the waters of Sutlej, Ravi and Beas Rivers, and control of the Bhakra Dam on the Sutlej, and that the fertile state, which produces the bulk of India's grain, be granted preferential prices for its food as well as more state industry.

* Amritsar be declared a holy city in which smoking would be banned and that there be no interference in Sikhs' religious affairs.

* Sikhs be given a greater role in the military. Sikhs are only 2 percent of India's nearly 800 million population but they made up 30 percent of the Indian Army when the British left. The Akalis claim that now only 2.5 percent of the Army comes from Punjab but government officials say it is closer to 10 percent.

* Release of the 25,000 Sikhs being held for participating in the Akalis' protests, which have included the "courting arrest" technique popularized in Mahatma Gandhi's nonviolent resistance movement that led to independence.

The Akali Party's frequent charge of government discrimination against Sikhs is denied vehemently by the Punjab's chief minister, Darbara Singh, and by many moderate Sikhs, who acknowledge that the sect's influence in India far outstrips its size.

Kushwant Singh, the Sikh editor of the Hindustan Times, maintains, however, that while the Akalis' protests have evoked little popular support among Sikhs, the sect's grievances are legitimate enough that the majority supports the Akali Party rather than turning to other opposition parties.

However, Singh said only a "lunatic fringe" of Sikhs supports the separatist movement.

According to the 1971 census, there were 8 million Sikhs and 5 million Hindus in Punjab, but some moderate Sikhs claim that emigration of many ambitious Sikhs to Britain and the United States and a large influx of Hindu laborers into Punjab has narrowed the gap.

Indian political observers note that while Gandhi could put together a compromise, perhaps offering the Sikhs Amritsar as a capital and answering some of their lesser demands, this could exacerbate the crisis because of the divisions in the Akali Party. If one faction accepted the proposals, they say, the other might condemn it.

If the government fails to get the Akali Party to negotiate, moderate Sikhs say, the radicals are likely to renew violent confrontations.