President Anwar Sadat of Eyypt opened the Palestine National Council meeting tonight with a strongly worded rejection of President Jimmy Carter's concept of defensible borders of Israel.

Sadat did not mention Carter by name, but he told the applauding Palestinians that "I want all to listen on this occasion. We shall not cede one inch of our land. The national land is not open to bargaining."

It was the first authoritative Egyptian response to Carter's suggestion this past week that a Middle East peace settlement might include some defense lines for the Israelis beyond that country's recognized 1967 frontiers.

Sadat was delivering the opening address at the Palestine Liberation Organization representative assembly's first session since 1974.

The position on the issue of secure borders that Sadat expressed tonight is the same as it was before Carter raised the subject - that it is a thinly disguised excuse to "sanctify" Israeli territorial expansion.

If it ever had any merit as a strategic concept, he said, that was "blown away by the winds' in the October 1973 war, when the most secure borders the Israelis could hope for, the Suez Canal and the Bar Lev line, were breached by the Egyptians."

In the Egyptian view, security for Israel lies in coming for terms with its neighbors, not in digging in against them.

The secure-borders issue is "nothing but a fantasy," Sadat said. "It is not admissible that anybody should speak of secure boudaries as part of the Israeli conception, it is absulutely unjust and unacceptable,"

In any peace agreement, he said, Isreal should withdraw completely from the territory occupied in 1967 because "we don't believe in rewarding the aggressor."

When he finished, he received a warm handshake and smile from Yasser Arafat, chairman of the PLO executive committee, and in that gesture lies a possible clue to the mood of this council.

Sadat said nothing, at this gathering of Palestinians about regaining all of the former Palestinian mandate or eliminating Israel. On the contrary, his remarks were in the context of his often-stated policy if the Isrealis will withdraw from the territories captured in 1967 and allow the creation of what Arafat called a "Palestinian national authority in a free country."

That appears to be the central decision facing the Palestinians here - whether to go to Geneva and accept officially as they have unofficially, the idea that they will have to settle for a mini-state, linked in some way to Jordan, in plate of their old dream of a return to all of their form homeland.

The leadership insists that this council will not even discuss revision of the Palestine National Charter, which calls for the elimination of Israel.

But the Palestinians are under heavy economic, military and political pressure from Egypt, Syria and Saudi Arabia to accept what they can get in an overall settlement with Israel. In practical terms, that means at most a West Bank Gaza Strip state, and many Palestinian leaders, including Arafat, are said to be resigned to that.

The National Council, which is expected to last about a week, is also scheduled to take up the rapprochement with Jordan, escalated anti-Israeli activity inside the occupied territories, and reunification of the military units that were pitted against each other in the Lebanon war.

[Israeli security forces prevented student demonstration today in four West Bank towns in support of the Cairo meeting, the military said, according to AP. Four youths were detained to Nablus].

The national council is an umbrella group commonly referred to as a Palestinian Parliament in exile. Its 290 seats are filled by Palestinians from throughout the world, representing all shades of Palestinian opinion from hard-core guerrilla rejectionists to Western-oriented politicians willing to accept peace with Israel. All major known factions to the Palestinian movement, are represented.

The congress was recently enlarged from 187 seats to give additional representative to independents and the so-called Palestinian diaspora, that is, those Palestinians who have moved to other countries.

The dominant group is still the Al Fatah guerrilla organization led by Arafat, which has about 45 per cent of the seats. The pro-Syrian Saiqa group under Zoheir Mohsen, the PLO military commander, his 15 seats.

Other important blocs are the militant Rejection Front guerrilla organizations led by George Habash of the Popular Front of the Liberation of Palestine, and worker and student groups. Some seats are expected to be left vacant - those allocated to Palestinians living in the Israeli-occupied West Bank and the Gaza Strip.

Palestinian sources say that even if these members were allowed to attend by Israel, the leadership discouraged them from coming out of fear they might not be allowed to return home.