LONDON, JUNE 6 -- With Britain's general election only five days away, the opposition Labor Party has shown surprising strength, significantly narrowing the gap with Prime Minister Margaret Thatcher's Conservatives.

Thatcher still holds a comfortable lead of from 8 to 10 percentage points in most opinion polls, enough to give her a reduced parliamentary majority of at least 50 seats. But the poor performance of the third-party Alliance, a lively Labor campaign and a series of Tory blunders have led to speculation that a Parliament in which no party has a majority, while still not probable, is at least a possibility.

That outcome was considered out of the question when the race for the June 11 vote began three weeks ago. An average of 11 polls taken the week before the election was called showed the Tories with 42 percent of the vote, compared to 31 percent for Labor. The Alliance, the electoral coalition of the Social Democratic and Liberal parties, had nearly 25 percent.

By the end of week three, however, the polling average shows the Conservatives with 42 percent, while a five-point drop in the Alliance vote appears to have gone almost totally to Labor.

The polls have been so volatile that on at least two occasions the London Stock Exchange has dropped billions of pounds in the space of 30 minutes after rumors spread that Labor was within a point or two of the Tories.

Whatever the results Thursday -- when what Labor leader Neil Kinnock calls "the only poll that counts" takes place -- commentators here are agreed that the race has gotten a lot more exciting.

Part of the reason is the collapse of the Alliance, which has turned the election back into a two-party race between Labor and the Conservatives. While Social Democratic leader David Owen and David Steel of the Liberals have conducted a credible campaign, getting high marks from analysts across the board for their sober speeches, moderate policies, and efforts to meet "real voters" rather than stage "photo opportunities," it is their very sobriety that seems to be doing them in.

At the same time, even some of Thatcher's senior aides agree that the Conservative Party campaign has been less than sparkling. During the last campaign, in 1983, the Tories were credited with being the first party to move campaigning into the late 20th century, with high powered ad agencies, polished presentation and concentration on television.

The polish is still there thanks to a phalanx of advisers and experts on everything from Thatcher's makeup to the lighting for her news conferences. But the campaign seems to lack spontaneity and warmth.

Thatcher spent the first week in London, where morning news conferences were intended to give a week-long exposition of the Tory record and future programs. Instead, the Conservatives found themselves drawn for days into an uncomfortable argument over their plans to take control of education away from local school boards.

Meanwhile, Kinnock spent week one racing around the country, shaking hands, shouting speeches and displaying his own polished new style, remarkably free of the gaffes that have often marked his performances.

But what brought Labor's rise during the first week of polling, party strategists agree, was a televised Kinnock "biography" shown as a political advertisement. The ad portrayed him from his beginnings in a Welsh coal town, through heartwarming scenes of Kinnock with his wife and two children, to film clips of his more rousing speeches against extremist "militants."

By the end of the week, media commentators had begun referring to Kinnock -- formerly described as a "bantam rooster" or a "Welsh windbag" -- as "presidential."

The ad was part of Labor's own leap into the world of television-oriented campaigning, begun last year when the party changed its traditional symbol from a flaming red banner to a soft red rose. Labor strategists decided to show the ad again last week, taking up another of the five free television slots that each party is allotted for partisan broadcasts.

During week two, the Conservatives counterattacked Labor's weakest point -- its policy of unilateral nuclear disarmament, and Thatcher headed out on the campaign trail.

But the strict security precautions that have surrounded her appearances have sometimes made them seem lackluster.

Last Thursday, during her regular morning campaign news conference, Thatcher became embroiled in controversy over the National Health Service, which Labor has charged is underfunded and burdened with years-long waiting lists for treatment.

Acknowledging that she, along with 5 million other Britons, has private health insurance, Thatcher said it enabled her "to go into the hospital on the day I want, at the time I want, with the doctor I want, and so I can get out fast -- for me that is absolutely vital."

Kinnock responded, "It's just as vital for so many other people, either because of their occupation or simply because they are in excruciating pain."

Sources in the Tory camp said this weekend they intend to strike back in a final campaign blitz. Polls due for release Sunday reportedly indicate a new Conservative surge as Thatcher began a concerted attack on Labor's plans to raise taxes.