As Britain's streets were decorated with flags and finery today in anticipation of Wednesday's royal wedding, both the monarchy and the government were distracted by escalating controversy over South Africa that politicians warned was heading toward a "constitutional crisis."

At a news conference called to discuss wedding plans of Queen Elizabeth's son Prince Andrew and Sarah Ferguson, the palace press spokesman was besieged with questions about reports that the queen was unhappy with Prime Minister Margaret Thatcher's handling of disagreements between Britain and its Commonwealth allies over the imposition of sanctions against Pretoria.

"I am not here to answer questions about that subject," spokesman Michael Shea said repeatedly.

Following a new series of press reports in the past two days alleging the queen's distress and citing "unimpeachable" sources close to the palace, constitutional expert and member of Parliament Enoch Powell charged that dissident "dirty dogs" in Thatcher's own Conservative Party had planted the stories to discredit the government.

Citing the limited powers of the crown, Powell said it was "inconceivable . . . that the sovereign should have expressed an opinion, or allowed an opinion to be expressed, which was at variance with the advice she received from her constitutional ministers."

Norman St. John-Stevas, an expert on the constitutional monarchy, agreed that such a prospect was "absolutely unthinkable." But, he said, "there is a substratum of truth in this -- that the queen is deeply concerned about the Commonwealth and its unity."

The Commonwealth "crisis" is likely to get worse before it gets better. Three more countries said today that they will not attend the quadrennial Commonwealth Games scheduled to begin in Scotland Thursday. With the addition of the Seychelles, Cyprus and Sri Lanka, 27 of the Commonwealth's 49 member nations now have announced boycotts of the games in protest of Thatcher's refusal to consider comprehensive sanctions.

Faced with the absence of at least one-third of the 3,200 athletes who were expected to participate, games officials today asked nonboycotting nations to send extra team members. British publishing baron Robert Maxwell, who is chairman of the games, said he plans to bill the boycotting nations for "inconvenience and loss" to the organizers.

The controversy clearly has embarrassed the government, providing a forum for criticism of Thatcher that some Conservatives seem to be using with even more relish than the Labor Party opposition.

Considered the party of the monarchy, the Tories appear particularly upset over the reports of a rift between Thatcher and the queen. Some Conservative who disagree with Thatcher on a number of issues apparently see the supposed enlistment of the queen to their cause as a way to get Thatcher's attention.

The Sunday Times newspaper reported the queen is unhappy not only over the threat that Thatcher's opposition to sanctions poses to the unity of the Commonwealth, but over a range of domestic policies on which the government appears "uncaring, confrontational and socially divisive." The article was sharply denied by Downing Street, but somewhat equivocally dismissed by Buckingham Palace.

Foreign Secretary Geoffrey Howe said in Brussels that the European Community may impose economic sanctions on South Africa if his current consultations in the region do not make progress toward ending apartheid, The Associated Press reported. His mission on behalf of the EC continues with a week-long visit to South Africa starting Tuesday.