Gospel story with a contemporary-South setting

Cotton Patch Gospel Gospel musical with book by Tom Key and Russell Treyz, music and lyrics by Harry Chapin. Based on ''The Cotton Patch Version of Matthew and John,'' by Clarence Jordan. Directed by Mr. Treyz.

Once again, the story of Jesus provides the script for a contemporary folk musical. ''Cotton Patch Gospel'' translates key passages from the books of Matthew and John into Southern vernacular. In the Clarence Jordan version adapted by Tom Key and Russell Treyz, the locale of the Master's life and career shifts to contemporary Georgia. The update imagines Deep South equivalents for the people and places of the Bible record. In his final work, the late Harry Chapin composed a beguiling country-music score to complement the spoken text.

The concept and its stage realization are marked by a feeling of childlike belief, joy, and simple reverence. A sense of wonder comingles with an uninhibited sense of humor. The Jesus figure of this reenactment is a spiritually endowed young teacher and preacher from Valdosta, the circumstances of whose birth foreshadow his mission to come.

In the altered states of the ''Cotton Patch Gospel,'' actor-narrator Key unfolds a scenario in which a latter-day Jesus faces circumstances, temptations, triumphs, and church-state trials patterned on the New Testament accounts. The Lord is born in a trailer because there is no room at the motel. The Holy Family flees to Mexico to escape Herod. Jerusalem becomes Atlanta, ''the Big Peach,'' scene of the great big Bible meeting. Jesus is betrayed by a slyly treacherous ''Jud,'' is lynched by a Klan mob, and returns to inspire his grieving disciples after his resurrection.

Harry Chapin contributed a score to match the homespun eloquence of the text. Brother Tom Chapin serves as musical director. The numbers are played and sung with zest and excellent musicianship by an onstage quartet inevitably billed as the Cotton Pickers (Scott Ainslie, Michael Mark, Pete Corum, and Jim Lauderdale). A fresh-faced young preview audience responded with special enthusiasm to such songs as ''Turn Around,'' ''There Ain't No Busy Signals/Spitball,'' ''Are We Ready,'' and ''Jubilation.''

Besides making his own vocal contributions along the way, the adept and likable Mr. Key plays all the major and incidental roles, from IRS tax man Matthew to ''Governor'' Pilate, from a fiery backwoods ''John the Baptizer'' to a good Samaritan in the person of a black truck driver.

''Cotton Patch Gospel'' thus adapts the New Testament to the age of rock music, convenience foods, religious commercialization, and even some honest, old-time religion. Directed by Mr. Treyz, the attractive production at the Lambs Theater was designed by John Falabella and lighted by Roger Morgan.