NEW YORK CITY is well known for its long and sensational political history -- Boss Tweed and Tammany Hall, "handsome" Jimmy Walker, Fiorello LaGuardia, William O'Dwyer, etc. The Big Apple is jammed with warring factions: reformers fight reformers and bosses battle bosses. Unlike Chicago, where one man has ruled with supreme authority for two decades, New York is the scene of constantly shifting alliances and a frantic scramble for power and patronage.

As in 1961, 1965 and 1969, the mayoral race in New York this year has been wild and unpredictable. By the time Mayor John V. Lindsay announced that eight years was enough and that he would seek greener pastures (the senate or governor's mansion) in 1974 or 1976, several Democrats had already declared their availability for his job and others were waiting in the wings.

But suddenly, speculation on the possibility of a fusion mayor became serious, as Governor Nelson Rockefeller and Liberal Party chieftain Alex Rose tried to find someone they could agree on. Rockefeller wanted to prevent any possible change-of-mind by his arch-rival Lindsay, as well as extend his iron-hand control of the state into the city. Rose wanted to preserve Liberal influence at City Hall by making the next mayor beholden to him. Both Rockefeller and Rose wanted to stop the growing momentum of Congressman Mario Biaggi, a conservative Democrat who was also the most decorated policeman in New York history.

In an incredible series of maneuvers, Rockefeller and Rose attempted to hand the Republican and Liberal mayoral nominations to former Democratic mayor Robert F. Wagner. It was Wagner's three-term record that both men had attacked when they endorsed Lindsay in 1965. Now they were asking Wagner to save the city from the mistakes of the eight-year Lindsay administration.

THE IRONY of the situation was not lost on Wagner, who publicly expressed guarded interest in the proposal. Meanwhile, Rose fulfilled his part of the bargain by nominating Wagner on the Liberal line. Rockefeller proceeded to bludgeon the city's five Republican county leaders into acceptance of the deal. But Rockefeller could not dissuade State Senator John Marchi from a second assault on the mayoralty (it was Marchi who defeated Lindsay in the 1969 Republican mayoral primary and then went on to lose the election as he split the right-of-center vote with the Democratic nominee, Comptroller Mario Procaccino).

Now it was Wagner's turn to throw pie in the face of Rockefeller. After calling the GOP county leaders "peanut politicians," Wagner turned down the idea of a primary fight with Marchi, a fight he would surely have lost. A few days later, Wagner also rejected the Liberal Party's offer, claiming that he did not possess the consuming desire for the mayoralty that he felt was necessary.

The field of candidates in the Democratic primary on June 5 has dwindled to four -- Comptroller Abraham Beame, Rep. Herman Badillo, Albert Blumenthal, a state assemblyman from Manhattan's West Side, and Biaggi. Badillo and Blumenthal are competing for the liberal and minority vote, though it is generally conceded that Blumenthal's campaign gained some much-needed momentum from his recent endorsement by the Liberal Party.

BUT SINCE most political observers believe that New Yorkers are fed up with liberals, attention has focused on the race between Beame and Biaggi. And it is Biaggi that has captured all the headlines over the past two weeks, trying to defend himself against reports in The New York Times and The Daily News that he invoked the Fifth Amendment in refusing to answer questions on his personal finances put to him by a grand jury in 1971.

Biaggi has heatedly denied the reports, charging that he is being framed. In an emotional, paid broadcast on Wednesday night, Biaggi said he would move in Federal Court to have a three-judge panel review his testimony before the grand jury to determine whether or not he had invoked special privileges.

This was an unprecedented request, and some legal experts speculated that Biaggi may have deliberately made the motion an impossible one, so that it would be thrown out by the court. In any case, United States Attorney Whitney North Seymour Jr. argued that the entire testimony should be released, with the deletion of third-party names. This is what Judge Edmund L. Palmieri on Thursday decided should be done, ruling that the Biaggi motion was improper because it tried to proscribe the court's action.

Biaggi and his lawyer were stunned by this turn of events. They still have the option of appealing the judge's decision to a higher court, before Biaggi's 1971 grand jury testimony is released today. Biaggi has argued against full disclosure because he says innocent people are involved and their reputations would be sullied. However, it seems that such third parties would be amply protected by the simple deletion of their names. If Biaggi appeals Palmieri's decision today, it will look as if there is something else he wants to hide.

UNLESS BIAGGI is completely vindicated, the obvious winner in this bizarre affair will be Abe Beame. Beame has been a good Comptroller, even if at times unable to resist petty attacks on Lindsay, whom he has never forgiven for his defeat in 1965. Beame is not regarded as terribly imaginative, but his integrity is unquestioned. Jewish voters who might normally vote for Blumenthal can pull the lever for Beame without a trace of guilt, as Beame occupies the solid center of the political spectrum. With only five weeks left before the primary, Biaggi will have to recover very fast from this body blow if he is to have any chance of catching Beame.