Taisuke Inoue's co-workers at the chemical plant used to joke darkly that by the time they reached 65 they would all be dying of lung cancer. Just before Inoue's 65th birthday several months ago, doctors diagnosed his respiratory tumors with uncanny timing.

"We never really understood the dangers involved," says the former factory hand of the highly toxic hexavalent chromium that he was exposed to almost daily for 25 years until his retirement in 1974. Now he wonders, "How could the technical people in management, who should have known the risks, have allowed this to happen?"

Inoue is typical of thousands of other Japanese who the government and the courts have acknowleged as victims of toxic waste poisoning since a series of widely publicized man-made calamities in the 1960s and early 1970s. Those cases earned this industrialized country a worldwide reputation as an environmental basket case.

At a time when reports of illegal dumpings, spills, and alleged mismanagement of government antipollution coffers have grabbed headlines in the United States, however, even the most ardent Japanese environmentalists concede that government and industry here have made impressive strides in recent years to clean up the country's air, water and soil.

The sulfurous, yellow haze that, 10 years ago, blanketed cities in the crowded Tokyo-Osaka industrial belt along Japan's Pacific coast has now largely disappeared. Hundreds of environmental checkpoints dot major urban areas where levels of air and water pollutants are monitored each hour against some of the world's toughest standards. Rivers whose toxic soup could once develop camera film now run with water fit for drinking.

The festering underside of Japan's "economic miracle" touched off an embittered public outcry here in the 1970s and prompted Tokyo to enact, with record speed, a bundle of stringent new laws regulating the disposal of hazardous wastes. Polluters were forced to restore dumping sites to original conditions or face prison terms of up to a year at hard labor and substantial fines.

According to officials, violators rarely risk the social disgrace accompanying such penalties in Japanese society's rigid pecking order. Authorities have also helped ensure compliance with the liberal use of "administrative guidance," a code phrase here for the coaxing, cajoling, and arm-twisting Japanese officials use to get the private sector to toe the government's policy line.

"The public reaction to pollution was so enormous," says Kunihiro Tajima, a senior Health and Welfare Ministry official, "that tremendous pressure was brought to bear on industry. Industrialists were forced to reflect on the moral aspects of their behavior."

"Things just got so bad," says an executive at a major steel company, who did not want to be named, "that we finally realized that pollution didn't pay and that we'd eventually kill ourselves on these small islands." Apace with other large Japanese manufacturers, he says, his company routinely spent 25 percent of its yearly multimillion-dollar outlays for capital equipment on pollution control devices throughout the 1970s.

Despite the apparent change in attitudes in business circles here, however, the government's Environmental Agency keeps close tabs on potential polluters. Japan has roughly 20,000 sources of hazardous waste that spew out about 1.5 billion pounds of it each year, all of which, officials assert, is properly disposed of.

Because of the limited land area on Japan's narrow chain of volcanic islands, all forms of open dumping have been outlawed. The government oversees about 1,000 sites around the country where toxic wastes are placed in hexagonal concrete containers after chemical processing and buried deep underground to prevent leaching into water supplies.

In Japan, there is no equivalent to the United States' $1.6 billion "Superfund" program aimed at accelerating cleanup of the most hazardous waste sites. Despite the once staggering magnitude of toxic waste headaches here, both national and local governments have spent only $275 million over the last decade on the 60 areas nationwide that have been officially targeted for rehabilitation.

"After having been the leading country down the road of serious industrial pollution," Tajima says, "Japan is now among the most advanced countries in dealing with such problems."

Bungaku Watanabe, a leading environmental activist, concedes, "The most flagrant episodes of toxic waste poisoning have now been halted because of the accumulated efforts of government and business." But he says such cases are "only the tip of the iceberg" and that a silent spring of deadly chemicals--cadmium, arsenic, PCB, among others--continues to bubble under the country's topsoil and at the bottom of its waterways.

As an example, he cites the unsolved problem of reversing the damage done to Minamata Bay in southern Japan by Chisso Corp., a major fertilizer manufacturer, which dumped massive amounts of toxic mercury there in the 1950s. Many of the Minamata victims have now been compensated for the physical deformities and mental disorders they suffered in the disaster.

But the mud at the bottom of the bay remains laden with an astounding 25 parts per million of mercury. Plans to dredge up about 2 million cubic yards of the noisome sludge have failed to advance because of a dispute among Chisso and the national and local governments over who should ultimately bear the costs.

Environmentalists chide Tokyo for its practice of leaving the responsibility for enforcing antipollution regulations in the hands of local government authorities, who are apt to treat major violators more leniently because of the pressures that powerful home town industries might be able to exert when a crackdown is in the offing.

They also contend that the Environmental Agency, which was created in 1971, has little clout and that it is often outmaneuvered on policy issues by older, more prestigious government departments such as the Ministry of International Trade and Industry, which is charged with watching out for the interests of big business.

Agency officials acknowlege that efforts to clean up the environment have been complicated by nagging new problems. Despite the fact that Japan now enforces the world's toughest automobile exhaust emissions standards, the amount of nitrogen dioxide in the air of its traffic-clogged cities is dangerously on the rise. The increasing use of home laundry detergents has accelerated the seepage of phosphorous and other toxic agents into the country's reservoirs and ground water and killed fish by the millions in its lakes and rivers.

In contrast to the considerably larger scope of problems now posed by toxic wastes in the United States, Japan appears to have already overcome its most serious environmental hurdles.

Health and Welfare official Tajima suggests, however, that the Japanese have no lessons for America. Because Japan has a land area only about the size of California, he says, "our sheer compactness has allowed us to implement policies very effectively and prevent more serious problems before they start."