Profile : She Honestly Loves Life: OLIVIA NEWTON-JOHN EMBRACES EVERY DAY AND A CHRISTMAS STORY

Olivia Newton-John is mellowing out on the white slip-covered couch in her Malibu living room. “This is my favorite room in the house because of the view,” she says, gazing out the floor-to-ceiling windows at the expanse of blue water.

So far, it’s been a pretty peaceful morning for the Australian singer-actress who kept up a frenetic pace during the ‘70s and ‘80s with pop hits such as “Have You Never Been Mellow,” “I Honestly Love You” and “Physical”; the movies “Grease” and “Two of a Kind” with another icon of the era, John Travolta, and a stake in the now-defunct clothing store chain Koala Blue.

When she awakened this sunny day, she went out on the balcony with a cup of tea, “just looking out at the birds and the pelicans.” She ate breakfast with 9-year-old daughter Chloe. Then she took her two dogs for a walk on the beach below her home.

Newton-John, 46, has learned to relish these small moments in life. “I just kind of live in the moment and enjoy it,” she says, looking comfy in a white-hooded sweatshirt and no makeup except for a touch of lipstick.

But her wisdom was hard-earned. Like the widow with two daughters she plays in Sunday’s CBS movie “A Christmas Romance,” Newton-John has been through some trying times. “I can relate to her loneliness. I can relate to the pain she’s going through.”

The last few years have been character-building, to say the least. First, Newton-John endured the death of her best friend’s daughter, Colette, who was a close pal of Chloe’s, to a rare children’s cancer. Then Newton-John’s own father died of cancer, and two weeks later in 1992, she found a lump in her breast that just didn’t feel right. “I knew something was wrong.” It turned out to be cancerous and she underwent treatment.

Her experience with breast cancer caused her to limit her commitments. “I needed to do that for myself. I wasn’t going to work, really, I was just going to relax,” says Newton-John. But then a project that touched her came along. “A Christmas Romance” is her first acting job in four years.

In the movie, Newton-John’s character and her daughters are snowed in their cabin with the cranky banker (Gregory Harrison) sent to evict them. She calls it a “don’t judge a book by its cover” story. No surprise that the banker warms to her character... and love blooms.

Ironically, her last role was also in a Christmastime TV movie, “A Mom for Christmas,” but Newton-John says that’s pure coincidence. “But they’re usually charming stories.” Now she’s getting ready for her own Christmas tradition--the devoted environmentalist, her husband, actor Matt Lattanzi, 35, and Chloe will plant a living Christmas tree outside their home.

The Christmas spirit is not the only thing about the movie that appealed to Newton-John. “There’s no violence, there’s no sex, it’s a family movie. My child can watch it. My child is in it,” she says with a big laugh.

Indeed, in her acting debut, third-grader Chloe Lattanzi stars as one of her mother’s daughters. It was Newton-John’s manager who suggested Chloe for the role. “I hadn’t even thought of it,” says Mom.

“I was so proud of her. It was wonderful to see her blossom as an actress,” Newton-John says of working with her daughter. “But it was also very difficult because I had to divide myself from being the mother and being the actress.”

Most of the time, she’s a less stressed-out mom who is very close to her daughter. “We do everything together.”

Lately, Chloe and her mom have had singing sessions on their white baby grand piano. “She has a nice little voice,” Newton-John says. Every so often, Chloe’s lilting voice wafts into the room from upstairs where she’s recuperating from a cold.

Newton-John recalls a difficult time as a parent. She decided not to tell Chloe when she was battling cancer and chemotherapy. “She had lost her best friend to cancer. I knew that if I told her, she’d think I was going to die.”

But after it was all over, someone else told Chloe. “She came running home and said, ‘Is it true?’ I told her it was, and I promised her from then on I’d always tell her everything.”

The news of her breast cancer hit Newton-John equally hard when she first heard it. “How do you think I felt?”

Newton-John’s group of close friends helped her through the ordeal--particularly her best friend, Nancy Chuda, Colette’s mother. Husband Lattanzi was also enormously supportive.

Colette’s disease and Newton-John’s own cancer inspired her and Lattanzi to build a completely environmentally sound home with the help of architect Jim Chuda, Colette’s father. It’s all natural wood and nontoxic materials: “It’s a healthy house.” Newton-John divides her time between her Malibu home and her avocado farm in Australia.

Newton-John hopes to become a role model for women with breast cancer. She had planned to write a book about it, but an album came out instead. She calls “Gaia: One Woman’s Journey,” which just went gold in Australia, intensely personal. “It was definitely cathartic.” She’s waiting for a distribution deal in the United States.

Now that she’s resurfaced with the TV movie and the album, Newton-John isn’t worried about being pegged as a throwback to the ‘70s or ‘80s. “I don’t think of myself that way. I think of myself as me, Olivia Newton-John. I know who I am.

“Once you’ve faced your greatest fears, life somehow doesn’t seem as threatening,” she says.

Suddenly, she spots a spider crawling on the couch. No squasher, she. She scoops it up and brings it outside to the balcony. She looks around. “What a perfect day,” she says.

“A Christmas Romance” airs Sunday on CBS at 9 p.m.