A revolutionary submarine that will transform undersea warfare is being developed in Canada.

It will be able to stay under water as long as standard modern nuclear submarines, but it will cost about half as much _ making it affordable to both budget-conscious NATO navies and Third World countries. The submarine could eventually take the place of vulnerable surface ships and helicopters in coastal defense.

It is designed to sit on the sea bed for weeks at a stretch, silently listening for other submarines or ships approaching the coast. Using torpedoes it will be able to attack and sink unsuspecting intruders.

Traditionally, there are only two types of submarine: the disel electric, which has limited endurance under water and has to surface regularly to "breathe," and the nuclear boat, which produces steam to drive its propellors.

The new submarine is classified as a nuclear-diesel hybrid and is being marketed by Stratas Submarine Services of Halifax, Nova Scotia, a VancouverHalifax union of veteran Canadian naval officers and businessmen.

Unlike a noisy steam-driven nuclear the new sub runs almost silently on electric motors and doesn't have to surface or come up to snorkel depth to recharge its batteries as do regular submarines. Stratas is using a small, Canadian-designed nuclear reactor that produces electricity and charges the batteries.

The Stratas submarines will be assembled in Port Hawkesbury on Canada's far eastern Cape Breton Island and launched into the Atlantic from the company's planned large submarine base there that could also service allied submarines.

Several countries, including the United States, Britain and, it is believed, the Soviet Union, have looked at the kind of hybrid design being marketed by Stratas, but until now, all have failed to devise a system that worked.

Stratas has emerged at a time of fierce Canadian debate about the proposed purchase of nuclear submarines, but its top executive denies any connection.

"We're not after the Canadian submarine sale," said Stratas president Peter Spencer, 45, of Halifax. "We are in final negotiations to sell our new type submarine to the first of several allied nations. We have a contract pending now for a number of boats with a value in excess of $1.2 billion."

Stratas believes countries will buy the submarine for picket duty in coastal waters. The international purchases are closely held secrets, but it's believed Stratas is negotiating a contract worth $1.2 billion with Turkey, and discussions are under way with other countries. Spencer would only say Stratas is awaiting completion of a client navy's technical review. "Then we'll agree on what options are going into their submarines."

Spencer, senior partner of a large Halifax law firm, said the new submarine "doesn't have a powerful nuclear reactor requiring regulated transfer of nuclear technology. We can sell our sub to friendly nations with Canadian export approval."

Slower than a bigger (typically 10,000 tons) long- range nuclear sub, the new 3,000-ton submarine is not designed for offensive use, although it can travel around the world for seven years on its low-power (less than 20 percent enriched) uranium fuel. "It's for defense and patrol and can lie hidden on the sea bed for weeks," Spencer said.

The biggest feature is the relatively low $250 million price. "For the rough cost of one British or French nuclear submarine a country could get about two Stratas subs," explained Spencer. "For the price of one U.S. nuclear sub they could have five Canadian nuclear hybrid submarines."

A better diesel-electric submarine has long been the dream of world navies. Regular submarines must surface for air while recharging batteries, while nuclear subs remain submerged and undetected by aircraft or satellite.

Canada, England and Sweden have been working on new submarine designs, and the United States has been researching alternative power systems.

A western navy source said the new sub could mean massive defense savings for the world's navies. "Unchecked intrusions in national waters by giant nuclear submarines is ending," said the officer, who asked not to be identified.

"This quiet little Canadian sub with a crew of 80 is hard to detect unless you're right over it while an intruding `boomer' or nuclear attack submarine can be heard from great distances. It's the first major improvement in diesel-electric submarines in 5O years."

Spencer said Stratas is the only company in Canada capable of constructing a military submarine. "We can assemble and mobilize a work force within 30 days. We have a technology consortium of some of the world's most respected multinationals."

The Halifax-headquartered Stratas has Canada's only nuclear-approved ocean site at Port Hawkesbury on Cape Breton Island, one of North America's deepest ocean-going ice-free ports. It has a front and back door to the Atlantic Ocean and is located on all the transit routes for military ships between North America and Europe.

At the port is the Stratas-reopened multimillion dollar Atomic Energy Canada Ltd. heavy water plant with its 60,000 square-foot complex of offices and machine shops.

The company has leased with an option to purchase the once-closed Cape Breton Industrial Marine shipyard and its floating dry dock. It plans to construct the submarine base on its 960 acres of railroad-fed waterfront land on the deep Straits of Canso dividing Cape Breton Island from Nova Scotia.

The area has been called the most strategic submarine deployment site in the North Atlantic. Canada's Enterprise Cape Breton has approved a $21 million investment tax credit to construct phase one of the submarine base.

"Our clients are stable, allied nations who have signed the Nuclear Nonproliferation Treaty," Spencer said. "Anything we do in Canada is subject to the approval of the External Affairs Department."

The pending export submarine order would be one of the biggest marine contracts in Canadian history and, including contracts to train the client country's personnel and upgrade its naval facilities, amounts to more than $2 billion.

"Submarines undergo periodic refits in which they're stripped to the hull and everything rebuilt or replaced over 25 years, making the whole project, including maintenance, worth over $5 billion," Spencer said.

Much of the eastern Canada submarine project has been kept secret but it's known that Stratas is joint venturing with giant Houston-based Brown and Root. The 3O,OOO employee engineering-construction multinational recently completed an $8OO million job at the U.S. naval base on Diego Garcia in the Indian Ocean.