MAKING IT UP, by Penelope Lively, Viking, 215 pages, $24.95.

Penelope Lively is the highly sophisticated and creative British author of some 16 critically acclaimed novels, including "Moon Tiger," winner of the Booker Prize — and most recently "The Photograph," a splendid novel about the power of memory as suggested in photographs.

Lively has reached the age when many artists write their memoirs. In "Making It Up," she has actually written the very antithesis of a memoir — focusing instead on the imaginary "alternatives" in her own life.

Everyone has asked themselves such questions as "What if I had married someone else? Or chosen another profession? Or lived in a different place?"

In Lively's case, she asks, "What if I hadn't escaped from Cairo, Egypt (her actual birthplace), at the outbreak of World War II?" What would her life have been like had she become pregnant at 18? Is life a question of destiny or merely a series of choices that can propel you in many different directions — with different friends, jobs, goals, experiences, education?

As she looks at the alternatives to her life, Lively gives the reader a hint of how real life can inspire fiction. In her case, World War II came to Egypt in 1941 when Rommel's army arrived at Sollum, on the west-

ern edge of Egypt. When the Germans arrived at El Alamein, they were only 70 miles from Alexandria.

As everyone anticipated a German assault on Cairo, questions arose as to what city or country would be best to receive the oppressed. Palestine? Kenya? Aden? Cape Town? South Africa would be an interesting place to see!

Lively didn't really go to Cape Town, but her alternative story takes her character in that direction. Shirley Manners seems a stand-in for Lively — a nanny whom everyone calls "Film Star" because she is pretty.

She is on a troop ship, and the stewards in white are really naval officers. There are no deck chairs, and the rooms are too basic and small. There are four beds in each room, "and they'd got a retired teacher from the English School in with them, a bit of an old prune-face, to be honest."

Shirley becomes infatuated with Alan Baker, a medical orderly who is looking forward to a week's leave in South Africa. When he asks Shirley why people call her "Film Star," she blushes. But he thinks a Hollywood type would be covered up with makeup and she isn't. "You're prettier by far!" he tells her.

Their developing love affair is interrupted when a life-saving drill becomes the real thing. Everyone is lowered into small boats over the side of the ship — then hoping to be picked up by another ship. At the conclusion, Lively writes, "This never happened. Or rather, it did not happen to me . . . we went to Palestine."

Tricky author. The next story (and the book tends to project the feeling of a collection of short stories) of the eight here is titled "Albert Hall," when Lively was 18, and she is attending the Chelsea Arts Ball and falling in love with the 30-year-old man who brought her. The direction of the evening is becoming clear — and she knows she could be tempted to have sex with this man. But she doesn't; it turns out to be "just a heady rite of passage."

But what if it had been otherwise? The story that unfolds is about a girl named Miranda who marries at 18, has kids and feels cheated to have lost her youth so soon. She had intended to go to Oxford, but instead she becomes an unprepared mother who lacks the knowledge to help her daughter Chloe with her homework.

The last story is titled "Penelope," and she is "wise and good." But Helen, her cousin, is so beautiful that she is "the fairest woman that ever lived in the world." This calls to mind Helen of Troy, among the Greeks, with Ulysses, Achilles — and Penelope. But this Penelope is just as beautiful as Helen, and she can "turn princes into frogs and you can hear them croaking still in the reeds beside the river."

This story concludes what Lively calls "a confabulation" (a term Lively preferred to be the title of the book), which in psychiatric terms means "the creation of imaginary remembered experiences which replace the gaps left by disorders of the memory."

Lively's memory is not disordered — and her writing is mesmerizing.