A retired major general of the Israeli army yesterday told a Quaker-sponsored conference here that "signals" currently emanating from the Palestine Liberation Organization should persuade Israel to consent to negotiate with the PLO.

"The question of the recognition of Israel by the PLO is the final test" of PLO willingness to enter into good-faith negotiations about peace in the Middle East, said Gen. Matti Peled, currently director of the department of Arab Studies of the University of Tel Aviv.

"I feel no difficulty in accepting all the signals" put forth by PLO spokesmen recently "as definite recognition of Israel and a reason for Israel to revise her policy" of refusing to talk to the PLO, he said.

Peled expounded his views on the Israeli-Palestine situation to a generally sympathetic audience of 270 persons attending a controversial weekend conference on Middle East peace problems sponsored by the American Friends Service Committee.

Just prior to his address, about 150 persons from the Zionist Organization of America demonstrated peacefully for half an hour in front of the 4-H Center in Chevy CHase, where the conference was held.

The demonstrators were protesting the scheduling by the Quakers of a PLO representative, Sabri Jiryis, to speak at the conference. Because Jiryis was denied a visa to come here, a PLO colleague, Isam Sartawi, addressed the conference by trans-Atlantic telephone hood-up instead.

Peled, a founding member of the unofficial Israel Council for Israeli-Palestine Peace, has met with PLO leaders in Europe. It was out of these contracts, as well as from Sartawi's remarks to the conference, that he drew his conclusions about favorable "signals."

In his telephoned address, Sartawi said that the PLO "is willing and ready to contribute to the establishment of peace as an equal partner." Sartawi also emphasized that peace in the Middle East "cannot be achieved without the approval and participation of a duly constituted, legitimate and freely-chosen Palestinian representative body," which he said the PLO represented.

Israel steadfastly has refused to negotiate with the PLO and the United States has supported that stand.

The leadership of the American Jewish community was so outraged at the prospect of dealing with the PLO, which has carried out widespread terorist activity against Israel, that the National Jewish Community Relations Advisory Council "strongly urged" that Jews in this country have nothing to do with the Quaker-sponsored conference here.

The boycott also extended to Peled's two-week lecture tour, undertaken under the auspices of the Friends.

At the close of his remarks yesterday, Peled observed that "in my two weeks of travel, I have noticed a well-organized boycott between me and Jewish audiences, so they are deprived of any information I can give them. I sometimes get the impression that talking to the PLO has long since ceased to be a political question but a theological one, in which if you talk to the PLO, you are a heretic."

He called the attitude of American Jewish leadership on this question "absolutely strange, unrealistic."

He contrasted the attitude of American Jews in the present situation to a private discussion of the same topic he had the previous evening with a group of fellow Israelis newly arrived from Israel.

The exchange, he said, "never became anything other than a sincere and frank discussion of issues which concern Israel very much. Any other approach (to this question) harms israel very much," he concluded.

At the demonstration on the Connecticut Avenue sidewalk outside the 4-H Center, Alec Resnick, vice chairman of the National Administrative Board of the Zionist Organization of America, congratulated his fellow-demonstrators for their "willingness to take part in opposing policies detrimental to Israel and the United States."

Tensions over the normally explosive question of Israel are higher than usual because the new administration has not yet announced its policy toward the Middle East, those present said.

Plans for the conference were set last spring, said Paul Brink, Friends spokesman, "because we knew the new administration would be forming their foreign policy now."

The Quaker agency, which has conducted extensive relief work among Palestinian refugees since they were displaced in the conflicts that led to the creation of Israel, favors peace negotiations with all parties involved, including the PLO participating.