Four years after his appointment as the Iran-contra independent counsel, Lawrence E. Walsh is seeking ways to limit current litigation that ensnares him and conclude his investigation, which still lacks full examination under oath of former White House aides Oliver L. North and John M. Poindexter.

Walsh, sources said, strongly believes he needs the full story from the two main operating figures in the Reagan White House in the Iran-contra scandal in order to complete the wide-ranging inquiry and prepare his final report.

Questioning of North and Poindexter under oath on all aspects of the affair has been delayed because North's three-count conviction was set aside by an appellate court and Poindexter is appealing his five-count conviction.

Walsh is expected to announce soon that he is hiring Andrew L. Frey, a former top deputy in the Justice Department's solicitor general's office to assist in preparing the North case for appeal before the Supreme Court.

As long as the possibility exists that one result of the North and Poindexter appeals is that they could be forced into a rehearing or retrial, Walsh believes that the two will not fully disclose all they know about the major political scandal of the Reagan administration, the sources said.

Former Justice Department officials suggest that in order for Walsh to get North's testimony while his case is still under appeal, the independent prosecutor could agree to "sacrifice" further legal action and let North go free if the Supreme Court upholds the appeals court.

North testified before Congress in 1987 under a grant of limited immunity from prosecution for what he revealed about the secret scheme to sell arms to Iran in exchange for Americans held hostage in the Middle East.

Profits from the arms sales were used to buy arms for the Nicaraguan contra rebels at a time that Congress had cut off military aid to the contras.

Walsh's final report will attempt to bring the entire affair into focus, sources said. Parts have been written, but other sections await the final questioning of North and Poindexter.

"Everything {Walsh's staff} can control is pretty much ready to get wrapped up early next year," one source said.

Meanwhile, Walsh has grown more sensitive to criticism that his investigation has been too drawn out, made serious tactical and legal mistakes and has cost too much, the sources said.

The attacks from critics combined with legal delays and the lack of general public and media interest in the scandal have bothered Walsh, who close associates say believes the Iran-contra affair exposed major flaws in the workings of government that need to be remedied.

In four years, Walsh has gained eight convictions, five by negotiated guilty pleas. As of Sept. 30, the investigation and prosecutions have cost $23 million, according to Walsh's office.

That is far less than what his critics charge he has spent but more than the cost of any other court-appointed special prosecutor.

The heaviest sentence, 16 months in prison, was given last week to retired CIA employee Thomas G. Clines, who was involved in selling arms to the contras and in September was found guilty of four counts of filing false statements on his federal income tax returns.

Among the other convictions, only Poindexter's sentence of six months in prison involved serving time. North and five others were fined and sentenced to probation and hours of community service.

At the height of the inquiry, Walsh had 28 full-time attorneys; today there are 10. As work on concluding the investigation is delayed by litigation, Walsh fears that the attorneys who remain will have to leave and return to their private firms, sources said.

The North case is the main legal hang-up. If the Supreme Court agrees to hear the case, it could be well into next year at the earliest before there is a decision.

The U.S. Court of Appeals for the District of Columbia determined in its July opinion on the North case that the trial judge, Gerhard A. Gesell, erred when he failed to order witness-by-witness and line-by-line review of grand jurors who voted to indict North and witnesses who testified at his trial to determine if any of their views were influenced by North's immunized congressional testimony.

As much as Walsh would like to conclude his own investigation, he believes the North decision was so far-reaching that it must be appealed to the Supreme Court because of the effect it could have on future criminal cases, sources said.

Walsh has "every motivation to bring {the investigation} to an end," a source said, adding that Walsh suggested in a recent speech that the probe could be ended by spring if North and Poindexter agree to testify.

Walsh's critics, including some congressional investigators, attacked his tactical approach from the start.

They said they believe North and Poindexter could have been prosecuted in early 1987, within months of Walsh's appointment, on charges of destruction of documents and making false statements.

Walsh spent almost a year investigating and attempting to prosecute North, Poindexter and two of their civilian associates -- retired Maj. Gen. Richard V. Secord and Albert Hakim -- for a conspiracy that included charges that the diversion of profits from covert sales of U.S. arms to Iran to support the Nicaraguan rebels was akin to stealing government property.

When those counts had to be dropped because legal problems prevented production of classified information demanded by the defense, North and Poindexter eventually were indicted and convicted on counts critics claim they should have faced two years earlier.

If the two had been convicted then, they might have been more likely to have cooperated, according to these critics.

Another major aspect of Walsh's investigation that took more than two years but ended in a failed prosecution because of inability to use classified information was directed at the activities of the Central Intelligence Agency during the Iran-contra affair.

Walsh attempted to prosecute the former CIA station chief in Costa Rica, Joseph Fernandez, on charges of making false statements in 1987 to the CIA inspector general's investigator and to officials of the Presidential Review Board headed by former senator John G. Tower (R-Tex.).

Walsh was forced to drop the case after more than 16 months of litigation when the U.S. Court of Appeals in Richmond upheld a federal judge's determination that the government's refusal to release classified CIA information that Fernandez needed for his defense meant he could not get a fair trial.

Walsh sharply attacked the Bush administration and Attorney General Dick Thornburgh for refusing to release the information.

Walsh has said he will recommend in his final report that some person other than the attorney general who is part of the government that has an interest in the case be designated to make the decision on declassification of documents.