In the midst of war-wracked Morazan province, this oddly peaceful small town has become a unique test case in the essential struggle for the support of El Salvador's common people.

Leftist guerrillas who have occupied the town of 3,000 are playing down the revolutionary rhetoric and stressing their initiatives for a long sought, fervently desired peace.

The U.S.-backed government's Army, when it withdrew, took the unusual step of urging the people to stay on, promising them they would not be accused of collaborating with the rebels later.

Rather than abandon everything and become refugees as thousands of villagers in El Salvador have done, most residents of the town decided to take the risk and remain. But they have maintained a studied neutrality.

With the guerrillas no longer bombing trucks and the Army permitting reporters and limited commerce to travel the tortuous dirt roads to the mountain village, the town has enjoyed an unusual prosperity for an occupied village.

On Sunday a 20-year-old guerrilla commander addressed an inattentive market-day crowd stressing the rebels' new, peaceful line.

"We don't ask for negotiations because we are afraid or weak but because we want the war to end . . . We are ready for a just and humane solution and an end to the bloodshed, including the blood shed by the government armed forces," he told women with fat babies in their arms, young boys with new straw hats flirting with young girls in their Sunday best.

"At any moment we are prepared to lay down our arms and end this war," continued the speaker from the National Resistance guerrilla faction who called himself Commander Miguel.

One of the villagers who decided to stay, veterinary products salesman Robert Ramirez, 37, came up to two American reporters interviewing guerrillas near the marketplace and said with only a touch of apparent nervousness in front of the whole group that he wanted to make it clear he and most of the people he knew do not support the rebels. This is definitely an occupied town, he said, not one that welcomed the insurgents.

"It's true that these"--meaning the visibly annoyed but quiet guerrillas standing next to him--"are more tractable than the others"--meaning the government's troops.

"When the Army comes into town they do not ask for identification, they, well, you know," said Ramirez. "We are defenseless."

A 24-year-old woman selling thread nearby said, "We're very afraid. Col. Flores told us to stay. He told everybody to come back. If anything happens to us it's his fault."

According to several villagers, when government troops abandoned this and a few other villages in Morazan province in November, Col. Jaime Flores of the 5th Brigade in San Miguel came here personally to tell the townspeople to stay put. The people remember him saying that when his soldiers returned they would not hold the villagers accountable as collaborators.

The curious modus vivendi that exists here started to take shape around Nov. 10, when a column of about 180 government troops was ambushed four miles to the south at a settlement called San Felipe.

Five burned-out trucks half blocking the narrow mountain road there testify to a serious major defeat for the government. Military sources have since confirmed that dozens of soldiers were killed, scores of others were taken prisoner and large quantities of arms were captured.

Several light artillery pieces fell into guerrilla hands there, including at least one 120-mm mortar apparently among those now being used in battle near the town of Meanguera to the west.

Since then this town has been in the guerrillas' hands and most of the people they have sent in are political cadres like Miguel trying to win recruits and public support.

The guerrillas do not spend the night in Corinto, preferring to stay in their base camp about five miles southeast of here.

One senior guerrilla officer said that at the moment, because of the present government offensive, rebel forces are spread a little thin in this area.

Miguel, in his speech to the townspeople Sunday morning, nevertheless cited the current fighting around Meanguera an example of the insurgents' ability to wage war as long and as effectively as necessary.

In less than two weeks, Meanguera has been taken by the rebels, retaken by the Army's best U.S.-trained battalions and then retaken by the rebels in heavy and constant fighting.

According to sources close to government commanders, the battle for Meanguera is the closest thing to conventional fighting with clearly discernible fronts that this war has seen.

The guerrillas believe such shows of strength are now vital to their effort to get negotiations for a settlement started.

Calling for Corinto's people to join the rebel militias, Miguel promised that if they did, the war could be ended in six months instead of "two or three or even 10 years." People here were not altogether convinced.

Miguel conceded afterward that participation in the militias still is "not massive."

Miguel felt compelled to quash a few damaging rumors, insisting that no one was or would be "drafted" into the guerrilla army. While alcoholic beverages will be banned as of Wednesday, Miguel said, "contrary to what some people have been hearing, there is no socialist country where alcoholic beverages are prohibited." This is strictly a wartime measure, he said.

If the guerrillas here do not have the people as allies in the fighting, a large number of Corinto's residents apparently would like to see the war end at the negotiating table.

"In this war the civilian population dies, guerrillas die, the soldiers of the Army die," Miguel told them. "We are doing what we can to see that this massacre does not continue."

That is a concept that most of the people in Corinto understand, support and only wish they could believe.