Relations between President Reagan and Congress have hit a new low, producing what one Democratic lawmaker calls a "trench war of attrition" in which each side can block the other in a way that jeopardizes the legislative agendas of both.

Caught in the cross-fire is everything from taxes, spending and budget overhaul to major foreign policy and national security issues, including the president's Strategic Defense Initiative (SDI) and Democratic proposals for arms control.

The Iran-contra affair, the Democrats' recapture of the Senate in last year's elections and the approach of next year's presidential and congressional contests have combined with other forces to create a climate of confrontation that is casting a cloud over both ends of Pennsylvania Avenue.

"I've never seen things as stalemated as they are now," Sen. Dale Bumpers (D-Ark.) said.

Also at stake are the Democratic hopes of persuading the American people that they can govern effectively, as well as Republican efforts to assure that Reagan's legacy lives on after he leaves office 18 months from now.

It is possible, some suggest, that both sides may fail.

What is likely, they say, is that gridlock will continue until around Oct. 1, when, presumably, Congress will have to provide spending and borrowing authority for the new fiscal year. Faced with the functional equivalent of bankruptcy, financial default and humiliation before the world, Congress and the White House can then be expected to engage in a messy, nerve-jangling showdown that will resolve -- to no one's total satisfaction -- nearly every contentious issue that has faced the 100th Congress since it convened in January.

But, in the meantime, lawmakers are braced for what Sen. Nancy Landon Kassebaum (R-Kan.) calls a "chess game in which the question is who can check whom."

Reagan's legislative blueprint for the year was relatively modest, and Democrats, emboldened both by their recapture of the Senate and by wounds suffered by Reagan in the Iran-contra affair, have been able to ignore most of it. The president's budget was a dead letter, as in earlier years, and his budget-revision ideas have drawn little more than a yawn. Congress is continuing to balk at defense-spending increases, including a big jump in the SDI antimissile program, and shows no signs of warming to his proposal for more aid to the Nicaraguan rebels.

But the Democrats lack the votes to impose their agenda, either by breaking Republican filibusters in the Senate, which requires 60 votes, or by passing legislation over a presidential veto, which requires a two-thirds majority of both houses. Democrats control 54 of 100 seats in the Senate and 258 of 435 seats in the House.

Seizing the opportunity, Senate Republicans have thwarted action on a broad array of Democratic moves, most recently including a proposal to force a 90-day delay in administration plans to reflag and give escort protection to Kuwaiti oil tankers in the Persian Gulf, an action that passed the House easily. Earlier casualties included the defense authorization bill for next year, including arms-control provisions, and legislation aimed at curbing the spiraling costs of congressional campaigns.

Moreover, veto threats hang over most big-ticket Democratic initiatives, including trade legislation that has been passed by the House and is expected to be approved by the Senate soon. Even a program to protect Medicare recipients against catastrophic health-care costs, proposed originally by the administration, has drawn preliminary veto warnings because Democrats have embroidered it with some of their designs, such as subsidies for outpatient drug care under Medicare.

In some cases, such as raising taxes to help reduce the budget deficit, Reagan can block Congress with a veto. In other instances, such as trade or catastrophic-illness insurance, he can use veto threats as leverage to get a bill more to his liking.

"It's not the old kind of high-profile confrontation" that characterized Reagan's dealings with congressional Democrats in the first six years of his administration, Sen. Jim Sasser (D-Tenn.) said. "Instead, it's a low-profile, low-intensity kind of trench war of attrition that goes on day after day."

Largely as a result of the Iran-contra affair, "the president has become more contentious and partisan, and Congress responds by becoming more contentious and partisan," said Rep. Leon E. Panetta (D-Calif.). "The result of this kind of situation is stalemate."

House Majority Whip Tony Coelho (D-Calif.) and many other Democrats contend that Reagan is seeking to deflect attention from the continuing saga of the Iranian arms sale and diversion of profits to the Nicaraguan contras by picking a fight with Congress over other things. "He needs a whipping boy and Congress is it," Coelho said.

"Sure, they can checkmate us, no doubt about it," Coelho added, "but it does not help the Republican Party not to govern."

But Republicans contend -- and some Democrats fear -- that the resulting standoff between Reagan and Congress will hurt the Democrats as much if not more than the Republicans.

Even the Democrats' charge that Reagan and the Republicans are holding up action by obstructionist tactics could be blunted if, by autumn, it is the Democrats who are engaged in a filibuster to block the confirmation of U.S. Appeals Court Judge Robert H. Bork as an associate justice of the Supreme Court. Democrats concede the risk, but say it will be a liability only if Bork proves to be more popular than they believe he will be. "If the perception is that Bork is not a good choice, a filibuster will be the popular thing to do," Coelho said.

"By limiting his agenda, Reagan has got it made for the next couple of years," said Sen. David Durenberger (R-Minn.), contending that Republicans have little to lose if Congress does little more than mark time for the rest of his administration.

"What you have," Bumpers said, "is a very calculated policy to keep the Democrats from governing so our record can't be used in the presidential and congressional campaigns next year."

Republicans do not put it quite that way, but Durenberger was smiling more than Bumpers. "I feel better about my reelection already," Durenberger said.