LONDON, NOV. 13 -- The prospect of a formal Conservative Party challenge to Prime Minister Margaret Thatcher increased sharply today as Geoffrey Howe, once a loyal lieutenant, accused her of jeopardizing Britain's future and of sabotaging her own government's policies by opposing greater European economic and political union.

There were gasps in the packed House of Commons as Howe explained his resignation as deputy prime minister two weeks ago by saying: "The prime minister's perceived attitude toward Europe is running increasingly serious risks for the future of our nation. It risks minimizing our influence. . . . We paid heavily in the past for late starts and squandered opportunities in Europe. We dare not let that happen again."

Howe stopped short of calling for the Thatcher's resignation, but hinted that she should step down or face a leadership challenge from within the ruling party. "I have done what I believe to be right for my party and my country," he concluded. "The time has come for others to consider their own response to the tragic conflict of loyalities with which I have myself wrestled for perhaps too long."

One of the most respected members of the House of Commons, Howe was Thatcher's first chancellor of the exchequer and later served as foreign secretary. Generally, he speaks in evasive diplomatic code. Analysts said his direct, at times acerbic attack on Thatcher would provide much encouragement for Michael Heseltine, the former defense secretary and Thatcher's main Tory rival, who must decide by Thursday whether to make a try for the party leadership at a Commons caucus session next week.

"This was a very, very powerful speech which went to the . . . heart of many of the issues," said David Howell, chairman of the foreign affairs committee and a party moderate. "There is no doubt that there will now be a leadership challenge and that challenge will be strengthened by what has been said. . . . It must influence people to realize something is badly wrong, and we cannot continue to go on as we are."

Thatcher, listening to the 19-minute address, smiled broadly and nodded when Howe praised her "courage and leadership" in transforming Britain into a market-oriented economy in the early 1980s. But the smile turned paper-thin when he described her opposition to further European integration as "remarkable and tragic."

Howe said Thatcher's opposition to linking the British pound to other European currencies had delayed Britain's entry into the exchange-rate mechanism for five years and had led directly to the double-digit inflation the country now suffers. He said she only agreed to conditions for joining last year after he and then-chancellor Nigel Lawson threatened to resign.

Howe contrasted Winston Churchill's encouragement of British participation in Europe with what he called Thatcher's "nightmare image" of a Europe "positively teeming with ill-intentioned people scheming, in her words, to extinguish democracy {and} to dissolve our national identity. . . . What kind of vision is that?"

In a speech in London Monday night, Thatcher made clear that she intends to contest any leadership challenge, using a cricket metaphor to describe how she would roundly defeat an opponent. Howe turned that metaphor on her today, saying she had undermined her own government's proposal for a common European currency. It was like going into a cricket match with "bats broken before the game by the team captain," he said.