An atomic wristwatch? Not quite. But researchers here at Westinghouse Electric Corporation have managed to shrink an atomic clock down to the size of a walnut. The new timepiece may improve everything from car phones to airplane landing controls. ''We think this is going to revolutionize a lot of new systems,'' says Irv Liberman, manager of Westinghouse's atomic-clock project. The clock has several advantages over current models. It weighs 100 times less and draws one-tenth the power. More important, it will cost roughly $1,000 while keeping time as accurately as today's $8,000 atomic clock. It is this cost reduction that has piqued the interest of several industries, even though the clock itself is at least 18 months away from commercialization. ''The need for low-cost and small-size accurate timing is extremely important,'' says Murli Thirumale, business manager for Hewlett-Packard's timing solutions for communications group. ''It becomes an enabling technology.'' Unlike a grandfather clock, which uses the swing of a pendulum to keep time, atomic clocks rely on the steady oscillation of atoms, which is far more accurate. The best atomic clocks, such as those made by Hewlett-Packard, vary by less than a second every 1 million years. The Westinghouse model isn't quite that accurate: It could lose a second every 2,700 years or so. Still, this accuracy may be good enough to help several industries. One of the big markets for atomic clocks is the global positioning satellite system, or GPS, Dr. Liberman says. Developed originally for the military, a network of satellites sends out signals that allow special receivers to determine their exact location, often to within one meter. The satellites already rely on atomic clocks to calculate their own position. If the GPS receivers could measure time as accurately, they could pinpoint their position even more quickly and accurately. The world's aviation tracking system is slated to adopt GPS within the next few years. Some companies, such as Minneapolis-based Honeywell, are building GPS air-traffic-control systems already. ''The improved clock would aid us in our accuracy somewhat,'' says Hal Pierce, manager of business development for Honeywell's commercial aviation systems group. But since Honeywell is selling its GPS receivers for $15,000 apiece, the price of the Westinghouse clock would probably have to drop below $1,000 before the company could justify using it, Mr. Pierce adds. Another potential commercial use is wireless communications. As cellular-telephone companies move from analog systems to a digital technology known as CDMA (code division multiple access), they will need to improve the precision of their equipment's timing. For example: As a car phone moves along the highway, the cellular system has to determine when to hand off the call from one cellular tower to another. This will become more complicated when the system goes digital, requiring better timing. ''As CDMA becomes the dominant digital service, there may be opportunities to use an atomic-clock device to synchronize the mechanics of the handoff process, especially as a backup,'' says Steve Fleischer, a spokesman for Bell Atlantic NYNEX Mobile, based in Bedminster, N.J. Traditional long-distance telephone companies are also interested. Currently, AT&T uses 16 atomic clocks to synchronize its long-distance network. The clocks constantly update many other, less precise clocks at secondary locations throughout the network. Cheaper, more accurate clocks could improve the process, especially as the company moves to a faster communications technology, says Ron Bravo, spokesman for AT&T's network services division. ''We're interested, but there are a whole lot of questions that have to be answered.'' The company would have to test the reliability, ruggedness, and life-expectancy of the Westinghouse clock before using it. The units might not be installed in the network, he adds, but could go instead in portable test sets used to maintain the network. The United States military, meanwhile, is looking at the technology for artillery shells. If each shell had a GPS receiver and atomic clock, it could be guided to its target far more precisely than today's shells. If the technology proves itself, that atomic wristwatch might not be so far off after all. ''We're a long way away from taking it to market,'' says Renny Swift, president of Westinghouse's watchmaking subsidiary, Wittnauer International. ''But there is a segment of the market that's out there for expensive clocks.''