Zenith Electronics Corp. and the American Telephone and Telegraph Co. are jointly developing an all-digital high-definition television system as Zenith's entry in the HDTV sweepstakes.

The system, touted as an improvement over a partially digital system previously announced by Zenith, keeps the manufacturer in the running for the coveted HDTV standard to be selected by the Federal Communications Commission.The standard will be the sole format used by cable, satellite and major commercial networks to provide Americans with the crystal-clear pictures and compact-disc-quality sound of HDTV.

At least two of the four other contenders for the national standard previously proposed all-digital systems that can transmit HDTV signals in the ones and zeros of computer language, making for clearer reception.

Industry analysts said Zenith had to come up with an all-digital system to stay in contention.

But they were impressed with its announcement that the TV sets for the proposed system would have 1,575 horizontal picture lines, resulting in higher picture resolution than competing systems based on 1,125 or 1,050 lines. The pictures on today's TV sets have 300 horizontal lines.

"On paper, it still looks to me like the best of the proposals," said James Magid, an analyst with Needham & Co. in New York.

Zenith spokesman John Taylor said his company and AT&T already were working toward an all-digital or mostly digital system prior to the proposals made earlier this year by New York-based General Instruments Corp. and by a consortium of N.V. Philips of the Netherlands, Thomson of France, the NBC network and the David Sarnoff Research Center.

"We did it to reap the benefits of digital technology, to provide interference-free and snow-free pictures," Taylor said in a telephone interview.

The other contenders for the HDTV standard are the Japan Broadcasting Corp. and the Massachusetts Institute of Technology.

The FCC will begin running the systems, one-by-one, through two-month tests beginning next April. The test period for Zenith's system begins in late October, Taylor said.

The FCC hopes to select a standard by June 1993.

Backers of HDTV say it could revitalize segments of the U.S. electronics industry and - through military, educational and medical spinoffs - be the linchpin for U.S. economic growth in the next century.

Zenith, the last major U.S.-based television manufacturer, is gambling heavily that its system will be chosen as the HDTV standard. The company sold its computer division in 1989 and has committed $50 million to HDTV research, in which it is cooperating with AT&T and its Bell Labs subsidiary.