More than 200 peasants have been killed in Nicaragua's northern jungles in a "reign of terror and unjust extermination," according to the country's Catholic bishops.

Most of the victims, including women and children, were killed by Nicaragua's National Guard, which doubles as army and police, following charges of collaboration with a guerrilla band of 50 leftist university students operating in the area around the Waslala River in the western part of the department of Zelaya, the bishops say.

Zelaya's priests, schoolteachers, peasants and even some local sheriffs claim that the collaboration charges are a pretext to seize the peasants' land and other spoils of war, including cattle and household goods, and to rape peasant women. Capuchin friars from the U.S. who are in charge of the Vicariate of Zelaya, report that 26 rural chapels have been converted into barracks and torture centers by the National Guard.

The guerrillas appear to get little support from the peasants. The Sandinista Front of National Liberation, named for a popular nationalist guerrilla of the 1920s has been reduced to a small hit-and-run campaign aimed primarily at attracting international publicity. The group's goals are to overthrow the Somoza family that has ruled Nicaragua for 41 years and end what they consider U.S. domination of the country.

?After congressional hearings on the reported abuses by the Nicaraguan National Guard, the State Department announced that it would withhold military assistance funds for 1977. The Department asked for a 1978 appropriation, however, in case the situation improves. In 1975, the National Guard received $1 million worth of arms and training assitance from the United States.)

Zelaya is a primitive land of rain forests and mountains where the only means of communcation is a decrepit DC-4 that hops between dirt runways. It is almost totally isolated from the more prosperous western half of the nation.

Until recently, it was the last frontier for the country's land-starved peasants who migrated from central and southwestern Nicaragua because of the spread of large cattle ranches and rural violence.

Many of Zelaya's peasants were born in the neighboring department of Matagalpa, which experienced similar violence in the early 1970s.

Migration has increased Zelaya's population by 47 per cent in the past decade. Now the same pattern of land takeovers and violence is being repeated in Zelaya.

A January postoral letter by Nicaragua's Catholic bishops denounced "arbitrary detentions" torture, rape and executions without previous trial" in the northern jungles, which include much of Zelaya, and Matagalpa. The letter emphasized "the increasing concentration of land and wealth at the expense of humble peasants who have been dispossessed of their fields."

The process already is well advanced, with 1,800 ranches occupying 50 per cent of Nicaragua's cultivated land, while 96,000 small farms occupy the rest. President Anastasio Somoza and his family own 8,260 square miles, an area approximately the size of nearby El Salvador.

As a result of this skewed distribution, 200,000 peasants are without land, although the country has more than enough to go around. Unlike tiny El Salvador, with its teeming population, Nicaragua has only 2.2 million people in an area the size of England and Wales combined. Yet half the population ekes out a subsistence living of about $120 per year on "small plots of land" or work as peons on large ranches.

In the more populated areas, such as Leon, a cotton-growing department in southwestern Nicaragua, 80 per cent of the peasants own no land, and their mud-and-cane shacks literally lean on the roads.

In contrast, the average peasant's farm in Zelaya is 250 acres.

"But this is only because nobody else wanted the land," explained a rural teacher. "Now that there are some roads under construction, the large ranches are moving into the southern and western areas of Zelaya.

"Whole districts have been wiped out by the National Guard on the pretext of guerrilla collaboration, yet there was no evidence of any support for the guerrillas," said another source, adding that in several cases the land of murdered peasants was re-distributed among the National Guard or turned over to the large ranchers.

According to informed sources, some 1,200 acres along the Iyas River in the Sofana district of western Zelaya were ceded to the local military chief, Col. Gonzalo Everts, last year, after the National Guard shot 40 Sofana peasants, including the family owned the land.

Everts' successor, Col. Gustavo Medina, recently authorized the takeover of lands wouth of the Dudu River by a large cattle rancher with adjacent holdings along the Matagalpa-Zelaya frontier, informed sources said. Of the 100 peasant families living on these lands, only 18 are left, the rest having fled or "disappeared," meaning they probably were shot by the military.

Sources who know the area well said similar process has occurred in the nearby Varrilla district, where 44 men, women and children were killed by the military in January after the local sheriff accused the head of the Gonzalez family of collaborating with the guerrilla. ALthough there was no evidence to support the sheriff's charge, the National Guard slaughtered the entire Gonzalez family, their married daughters and their families, including 29 children, burying the bodies in a common pit, the sources said.

Local military commanders take the attitude that every peasant is a potential guerrilla, but the peasants themselves insist that they want nothing to do with the guerrillas.

"We are like the meat in the middle of a sandwich," explained one farmer. "If we don't give the guerrillas food, they threaten to kill us. If we give them food, then the military kills us.

"All we want is to be left alone."