WASHINGTON (AP) _ The Santa Fe Southern Pacific Corp., asked the Interstate Commerce Commission on Thursday to reconsider the proposed merger of its two subsidiary railroads, saying competitive problems that blocked the deal last year have been resolved.

But opponents to the merger, including two other Western railroads and the Justice Department, said the revised proposal changes little and has the same flaws it had in July 1986 when the ICC rejected the merger.

The ICC hearing room was packed as the five commissioners heard three hours of testimony from a string of lawyers arguing either that the case ought to be reopened because the merger is in the public interest or that last year's ruling should be let to stand.

Hanging over the proceedings were questions about the economic viability of the individual railroads - the Southern Pacific and the Atchison, Topeka & Santa Fe - if the case is not reopened.

The Santa Fe Southern Corp., which completed its corporate merger previously, will have to sell one or both of the rail lines if the merger does not go through. The parent company itself has been in turmoil recently with the resignation of its chairman, the loss of $270 million last year and being the object of speculation about a hostile takeover.

''Are you worth more dead or alive?'' ICC Chairman Heather Gradison asked Southern Pacific lawyer Douglas Stephenson, alluding to the possiblity that the railroad might be dismembered.

Stephenson replied that stockholders probably would benefit if the railroad were sold in pieces, but he maintained shippers and the public would benefit from the rail line's merger with the Santa Fe. He said the parent company could save $295 million a year if the merger went through.

No decision on whether to reopen the case is expected until mid-July, and Gradison suggested repeatedly that even if the case is reconsidered a final ruling likely would not be possible until well into 1988, if that soon.

''There's a tremendous risk in reopening (the case). It puts people at risk for a long period of time when we cannot guarantee the results,'' she said.

In a decision that stunned the railroad industry, the ICC last July refused to approve the merger of the two railroads, which together would create the country's second-longest rail system, because of concern about reduced competition.

Since then, the Santa Fe Southern has reached various agreements with five competing railroads, including agreements to give up considerable trackage rights, in hopes those changes will convince the ICC to reverse itself.

Santa Fe attorney Gus Svolos said the new agreements would create increased competition in three ways, by:

-Creating a stronger competitor to the Union Pacific Railroad across the Southwest.

-Allowing the Denver & Rio Grande Western through new trackage rights to begin single-line service between San Francisco and Kansas City so it will better compete with the Union Pacific along that route.

-Expanding the single-line services available in the San Joaquin Valley of central California.

The argument was embraced by the Transportation Department and representative s of the railraoads who have entered into the trackage rights agreements.

But the Justice Department and lawyers for other competing railroads were not impressed.

''This is a thoroughly anti-competitive merger,'' declared Catherine Klion of the Justice Department, who urged the ICC members against reopening the case. ''Instead, you should order divestiture...and let the railroads get on with their business,'' she continued.

The Kansas City Southern Railway Co., has said it wants to buy the Southern Pacific. Its lawyer, Joseph Aurbach, suggested during testimony Thursday that other buyers also likely would express an interest.

Aurbach urged the ICC not to reopen the case, arguing that the new proposal represents no changes in the position rejected last July. He also asked the commission to order Santa Fe Southern to open the books of the Southern Pacific to potential buyers.

Douglas Babb, a lawyer for another large Western railroad, the Burlington Northern also argued that the ICC should stand by its decision.

The revised proposal with numerous trackage agreements involving other railroads would ''totally retructure the Western rail system ... (and) dramatically affect the (rail) traffic flow and competitive balance ... for years to come,'' Babb argued.