Long battle over Daniloff? The Daniloff dispute. Soviets could use legal system to prolong, or shorten, standoff. With Daniloff case caught up in Soviet legal machine, Washington prepares for drawn out confrontation. It indicts accused Soviet spy, considers congressional protest, weighs retaliation.

Both superpowers now seem to be preparing for a protracted and possibly damaging confrontation over the detention of Nicholas Daniloff. Mr. Daniloff, the Moscow correspondent of U.S. News & World Report, is being held on charges of espionage by the Soviet secret police, the KGB.

American experts say they believe the stage is now set for a full trial and an inevitable conviction of the American correspondent. Even though a guilty verdict seems foreordained, the Soviets will follow a complicated legal procedure that could take nine months or longer.

In the meantime, the United States will have to assess how much penalty to exact from the Soviets for Moscow's treatment of Daniloff, while trying not to harm US interests in the process. But the task will doubtless be complicated by the indictment in New York, on charges of espionage, of Soviet diplomat Gennady Zakharov. US experts believe it was the arrest of Mr. Zakharov that spurred the Soviets to arrest Daniloff, in an effort to arrange a ``swap.'' The US, however, has ruled out such an arrangement.

To be sure, the Soviets could quickly dispense with the charges against Daniloff and release him. But US experts now believe that is increasingly unlikely. ``I don't have much hope for a speedy resolution,'' one specialist says.

In the meantime, US-Soviet relations are likely to nose-dive, though how quickly -- and to what level -- it is impossible to predict.

An early indicator of the effect of the Daniloff impasse on superpower relations will be the fate of a scheduled US-Soviet program in Riga, Latvia, where distinguished Americans, including high-level government officials, would engage in public debate with Soviet counterparts. The ground-breaking event was called into question when the State Department announced that it was studying whether US officials would be taking part.

Congress is moving toward passage of a resolution protesting Daniloff's arrest, and calling upon Soviet leader Mikhail Gorbachev to secure Daniloff's immediate release. And President Reagan, just back from Santa Barbara, Calif., quickly summoned top advisers and congressional leaders to ponder how the Soviet leader might best be moved. The participants were pledged to secrecy.

Many US experts now believe that Gorbachev and his top advisers seriously miscalculated the impact of the Daniloff arrest. But they also believe that the uproar, while embarrassing the Kremlin, has prompted the Soviet leadership to dig in its heels over the issue.

Some administration officials labored behind the scenes to prevent the current standoff from occurring. According to some, President Reagan's initial appeal to Gorbachev for Daniloff's release, contained in a personal letter, was not supposed to be disclosed publicly. When it was leaked to the press, the Kremlin's announcement that Daniloff would be prosecuted appeared as a harsh rebuff.

Some administration aides believe the President had no choice but to call for Daniloff's release publicly, as he did in Denver on Monday. But other experts say that might actually prompt more foot-dragging on the part of the Soviets.

The Soviets have plenty of latitude in their handling of the case. Harold Berman, a professor of law at Emory University School of Law and an expert on the Soviet legal system, says authorities can take up to nine months probing charges against Daniloff. Only after a ``conclusion to indict'' is presented to Daniloff, says Professor Berman, will the journalist have the right to legal counsel.

The trial, if there is one, could be conducted by a military tribunal, because state secrets are allegedly involved, Berman says. Once the decision to go to trial is made, he adds, the case ``proceeds much more quickly'' than in a US courtroom. Thus the Soviets could proceed as quickly or ponderously as they chose, matching each US move against Zakharov, the accused Soviet spy, or quickly convicting Daniloff to heighten pressure on the US to strike a deal.

According to US officials, Zakharov was acting as a ``control agent'' overseeing others involved in espionage against the US. After his arrest, the Soviets may have expected that he would be quietly expelled. But when the US declined to turn him over to the Soviet Embassy, some experts believe, the Soviets set up the arrest of Daniloff to pressure for his release.

But, says one official, Moscow clearly underestimated the amount of protest in the US that would follow a move against a journalist, especially one as widely known and respected as Daniloff.

``They found that it got completely out of control,'' one US official says. The vexing problem for both sides is to bring the situation back under control.

Just how vexing a problem it is was clear even to Daniloff, although he is behind bars. He is preparing for a ``long haul,'' says his wife, Ruth, but thinks that ``his case is escalating rather dangerously'' and ``getting out of hand.''