WHEN Eddie Koiki Mabo launched legal action in 1982 seeking recognition of his people's traditional rights to a small island in the Torres Strait he told his wife, Boneta, that the case would be ''a big one.'' Just how big, Mr Mabo could have had no idea. Ten years on, on June 3 last year, the High Court of Australia issued what has become known as the Mabo judgement - a decision with the potential to divide Australia, pitting white against black. This month, the first anniversary of that judgement, that potential is in danger of being realised. Federal and state governments are pitted against each other, some white Australians are fearing - wrongly - for their own backyards, Aboriginal people say they are being harassed in the street, some even fear racial violence. The hysteria surrounding the Mabo decision is ''beginning to make people hate each other,'' Aboriginal leader Charles Perkins says. And Sandra Saunders, director of the South Australian Aboriginal Legal Rights Movement, says the ill-fated government efforts this month to come to grips with the judgement, plus the Aboriginal land claims that have resulted, have caused a reaction that is dividing Australian society. The High Court judgement in the case of Mabo vs Queensland (of which Mr Mabo's Murray island is officially a part) ended the legal fiction that Australia was empty when white settlement began in 1788 - a doctrine known as terra nullius, empty land, whichdenied Aborigines rights under British law. Not only did it recognise Mr Mabo's people's title, it said there could be other areas of Australia where native title existed. But any title later imposed by the British colonial administration would have precedence. The Federal Government marked the anniversary with a 33-point plan which provided, among other things, for: tribunals to decide where native title exists; legislation securing mining and pastoral leases granted since the 1975 Racial Discrimination Act and before June 30 this year and compensation to Aborigines whose lands are covered by those leases; rights of veto over leases for native title holders, to begin July 1. It was a plan that pleased almost no one. To Aboriginal leaders it reduced the whole issue of indigenous human rights in this, the UN Year of Indigenous Peoples, to ''a squalid land management problem,'' with the only certainty being white landholders' leases would be safe. To the mining lobby and its supporters such as Western Australian Premier Richard Court it threw security of title into doubt, would undermine investors and gave Aborigines more rights than other Australians. Mr Court went as far as to compare it to ''a form of apartheid, where we are granting certain lands, certain rights to those lands to a group of people.'' Nonetheless, Prime Minister Paul Keating expected the state premiers to agree to the plan at last Tuesday's heads of government meeting with only a week's notice. The talks dragged on into the night as Aborigines held a vigil outside protesting their exclusion, then into the next day. The outcome: bitter division. ''I gave substantial ground, but they would not give any ground,'' he said of Mr Court and Victorian Premier Jeff Kennett, the main opponents of his plan. He took a low key approach in the days following that defeat, but is now threatening to override the states with federal legislation to enshrine native title and arrange compensation. Finally seeking to broaden community support for his plans at the New South Wales Labor Party conference at the weekend and calling Mabo ''a true Labor cause'' he said the judgement was ''the best chance yet of finding an enduring and just basis for reconciliation between indigenous and non-indigenous Australians.'' Mr Kennett has recalled the Victorian Parliament to sit on July 20 to pass legislation to protect Victorian land titles against claims under the Mabo judgement (something Mr Court also plans). He says of Mr Keating's role last week: ''He wasn't there just to resolve Mabo; he was there to take on board this concept of guilt and what's happened in this country since settlement.'' However, in recent days Mr Kennett has opened the door for a compromise when the premiers meet again on July 5, but insists the Federal Government validate existing titles. With Victoria, Tasmania, Western Australia and New South Wales all threatening to enact their own legislation, strong leadership from Mr Keating and an acceptable compromise have become imperative. Not only would different systems in different parts of the country create international confusion, moves by some states to virtually extinguish Aborigines' native title would do little to enhance Australia's human rights record in regard to the country's indigenous people. Also, fear and anger within the community are rising - partly, it seems, out of ignorance over what Aborginal people actually want and what Mabo means; partly out of fear for existing land titles and preserving livelihoods; partly because of the massive land claims that have been lodged in the wake of Mabo; partly too, no doubt, because of elements of racism. In New South Wales the Wiradjuri people have lodged a High Court claim for one third of the state plus compensation for destruction of their culture. In Queensland, where a claim for the Brisbane CBD was lodged then withdrawn earlier this year, a A$500 million (about HK$2.5 billion) compensation claim for the Carnarvon Ranges has been lodged by the Bidjara people. Claims over Fraser, Stradbroke and Bribie islands are expected, as is a A$5 billion claim for the Torres Strait islands. The Liberal Party president, Paul Everingham, has warned A$30 billion worth of development projects could be jeopardised. The issue threatened to ''balkanise'' Australia, he said, saying he was standing up for ''the middle class, the backbone of this community.'' The mines lobby estimates more than 80 per cent of Western Australia is open to claims for native title. South Australian Aboriginal groups say they could claim 83 per cent of the state and Tasmanians will claim at least 20 per cent of the ''Apple Isle'' by year end. Just what the outcome will be is unclear. All that is certain is that it is likely to satisfy no one completely. But the destructive potential is enormous.