PRIME Minister Margaret Thatcher, after 11 years in power and 15 years as leader of the Conservative Party, finds herself under increasing pressure from large numbers of supporters either to change her policies on Europe or to resign. Michael Heseltine, a forceful senior Conservative politician, who has been positioning himself for four years to mount a challenge against her, has launched what is widely seen as the early stage of a bid for the the Conservative leadership.
Mrs. Thatcher's most loyal supporters admit that the event that provoked the crisis - the resignation on Nov. 1 of Sir Geoffrey Howe, the deputy prime minister, in a dispute over European policy - took her completely by surprise. It forced her into her fifth Cabinet shuffle in a year and triggered a damage limitation exercise by senior party figures.
Mr. Heseltine sent an open letter to party workers Nov. 3 in which, without directly naming Thatcher, he deplored Sir Geoffrey's departure as ``a tragedy,'' complained about decisions being ``imposed'' on the government by the prime minister, and called for a return to ``collective cabinet government.''
``The crisis is one of confidence. It must be quickly restored,'' he wrote.
As the prime minister retreated to Chequers, her country home, to prepare a reply for delivery in a debate immediately after the state opening of Parliament, more bad news continued to pile up on her doorstep.
A weekend poll of Conservative backbench members of Parliament (MPs) showed that 1 in 3 were unhappy with Thatcher's stance and style on Europe. In another poll, more than 2 out of 3 potential voters said they would prefer her to step down.
Other opinion polls forecast that at two parliamentary by-elections to be held on Nov. 8 the Conservative candidates would do badly. The Conservatives were rocked last month by the loss of a seat at Eastbourne that had been occupied by Ian Gow, a leading Thatcher loyalist, until his assassination by terrorists of the outlawed Irish Republican Army.
To add to Thatcher's worries, the Confederation of British Industry at its annual conference in Glasgow on Nov. 4 called on her to make a clear commitment to Europe, rather than oppose economic and political union as she had done at the Oct. 28 European Community summit in Rome and in a statement to the House of Commons on Nov. 1.
Sir Geoffrey's close friends said that the statement, in which she swore never to agree to a single currency and to defend the pound as a ``symbol of British sovereignty,'' made it impossible for him to remain in the Cabinet.
Sir Geoffrey was the last remaining member of the government that came to office in 1979. After he resigned, Neil Kinnock, leader of the opposition Labour Party, said that ``the man she has treated like a doormat has bitten back - and she deserves it.''
Sir Geoffrey was moved in July 1989 from the post of foreign secretary to be Thatcher's nominal deputy, with unspecified powers. Close friends say he had been unhappy ever since, and that in recent Cabinet meetings Thatcher had belittled and insulted him.
Thatcher was expected to use her Nov. 7 speech to restate her policies on Europe and to rebut criticism of her leadership style.
She will do so knowing that at least two key Cabinet ministers - John Major, chancellor of the exchequer, and Douglas Hurd, foreign secretary - share the convictions on European policy that led Sir Geoffrey to resign and Heseltine to publish his open letter.
Heseltine's decision to take advantage of Sir Geoffrey's resignation by preparing a bid for the party leadership angered senior Conservatives. Norman Tebbit, a former Conservative chairman, described his comments as ``puerile and unwise.''
After publishing his letter, Heseltine drove straight to London's Heathrow airport and flew on a private visit to Amman, Jordan. He left behind him a Conservative Party in turmoil and, according to Roy Hattersley, Labour's deputy leader, ``split from top to bottom and in a state of severe shock.''
Heseltine is widely acknowledged to be gambling for high stakes. In January 1986, when defense minister, he stormed out of the Cabinet, complaining that Thatcher had gone behind his back on a policy issue involving the purchase of helicopters.
Ever since, he has campaigned tirelessly around the country, preparing the way for a leadership bid. His twin themes have been the need for collective cabinet government and for a deep British commitment to Europe, which he describes as ``the greatest issue facing Britain.''
But Heseltine has to be ultra- cautious about finally committing himself to a leadership challenge. If he were to time his bid badly and lose, he would probably forfeit any future opportunity.
Under party rules, Conservative MPs have until four weeks after the state opening of Parliament to hold a ballot for the party leadership. Substantial numbers of MPs privately indicated last weekend that they would welcome a ballot. Some said they would like Sir Geoffrey to mount a challenge, others that another senior Conservative should play a ``stalking horse'' role.
By almost universal agreement, MPs discounted an early bid by Heseltine.
``He is still playing a long game. He is hoping that a bid will be made, and that the candidate will get so many votes that Thatcher will have no option but to go gracefully. That would require another contest in which Heseltine would be a leading candidate'' said one MP. ``The next month will be absolutely crucial to the prime minister's future. We want to win the next general election, and if enough of us decide that would be impossible with Thatcher as our leader, Michael's prospects will shoot sky high.''