The most closely read news stories in town are the ones in small rolls of photocopies that circulate here to diplomats, journalists, political leaders and a few others as late as two or three weeks after they are written. They are the articles censored daily from La Prensa, Nicaragua's sole remaining opposition voice.

La Prensa hand-delivers about 100 rolls of stories on an irregular basis to recipients who pride themselves on being the best informed people in the country. They include most of the government's top leaders, who say they get their copies indirectly.

Sometimes it is hard to figure out why an article was banned. A recent one concerned the spate of Grade C movies in Managua, and speculated half jokingly that a Yankee plot might be afoot to rot Nicaraguan minds. Observers decided the leftist Sandinista government was being sensitive about the cultural state of its revolution.

The Sandinistas defend censorship as essential while they are fighting off the attacks of U.S.-backed rebels, known here as contras. Although only military information is officially subject to the knife, a recent sample of excised items ranged from praise for the private sector to accounts of plantain shortages and an account of a Cuban youth having tossed a grenade into a crowded dance hall in northern Nicaragua, killing four persons and injuring 18.

"It's very arbitrary. It's almost paranoid," said Horacio Ortiz Jr., La Prensa's editor for local news. He said censorship had changed a great deal from the day in March 1981, before the contra battles began, when La Prensa was first shut down. That was over an editorial that jokingly recommended sending a copy of the works of the late Sandinista theoritician and founder Carlos Fonseca Amador to Britain's Prince Charles and Lady Diana as a wedding present. The Sandinistas did not find it funny and shut the newspaper for three days.

Reopened and closed several times since then, La Prensa has become less a true newspaper than an odd sort of voice for critics of the Sandinistas. The government routinely cites La Prensa's continued publication as proof that political pluralism exists here, while telling friends that only CIA money keeps the paper going.

Ortiz said the authorities have stopped censoring sports stories where Eastern Bloc teams lose, and foreign news is no longer affected, even items about labor troubles in Poland or international criticism of Cuba that used to be cut.

In local affairs, however, La Prensa loses 10 to 90 percent of its stories, Ortiz said. The lid was pretty much off during last year's election campaign, except for military items, and circulation went up by 20 percent from its usual 75,000, he related. But active censorship resumed afterward, and publisher Pedro Joaquin Chamorro went into exile in Costa Rica, charging he could no longer function in Nicaragua as a journalist.

Critics say La Prensa practices its own brand of censorship, ignoring many stories that would be genuine news in any other place. For instance, giant Sandinista rallies are not covered, nor are government war reports, military training or defense preparations such as fox-hole digging that affect the lives of many Nicaraguans.

The newspaper has ignored Nicaragua's suit against the United States at the World Court in The Hague and spiked human rights groups' charges of brutality by the contras.

"The government has all the radio and TV stations, both the other newspapers and all the magazines for that. Those things are not important to us," Ortiz responded. "If they would let us go to the frontier with guarantees of safety to do our own reporting, that would be different. As it is, they make political gain from those bodies" of contra victims, which are often shown in grisly detail in the government newspaper, Barricada.

President Daniel Ortega acknowledged in an interview that censorship here is arbitrary but said there were no plans to modify it. "Any exceptional measure like this has the risk of being arbitrary," he said.