Egyptian gunners shot down two Libyan jets and destroyed 40 tanks in a day-long desert battle yesterday following a Libyan armored attack on an Egyptian Mediterranean coast town, a military spokesman here said.

It was the second outburst of desert warfare in three days and followed years of border tension between the former allies who had once planned to merge in an Arab federation. The military spokesman said today's action was the latest in a series of border clashes that began July 12.

"There has been fighting but we have not declared war," a military spokesman said.

Radio Cairo said a large-scale battle took place about 350 miles west of Cairo near the village Salloum, close to the Libyan border on the Mediterranean Sea. The radio said Egyptian forces took prisoner 12 Libyan soldiers from the 9th Armored Division and 30 saboteurs.

Egypt said no Egyptian soldiers were killed but that several were wounded and one truck was lost.

The Egyptian spokesman said, "In today's action, Egyptian troops took particular care not to harm the civilian inhabitants of Musaed," a Libyan village west of Salloum.

[Tripoli Radio said in a repot monitored in Beirut that Egyptian troops were still on Libyan soil, fighting was continuing and that Libya had "only one alternative and that is retaliation in force. At dawn Thursday, an Egyptian force invaded the village of Musaed, killed innocent women and children, and shelled the local schools, hospitals and other civilians installations," Tripoli Radio charged.]

[A later Libyan broadcast said heavy concentrations of Egyptian troops had moved west of Musaed. It added: "The Egyptian air force is pounding the village of Bardi, with all its civilian installations, with the aim of killing women, elderly men and children."].

Efforts were under way in Cairo to convene an emergency meeting of the Arab League to resolve the conlifct. There were reports that the league's secretary general, Mahmoud Riad, was consulting with member states in an effort to convene a meeting of foreign ministers. Riad said he deplored the "terrible incidents along the border" and urged both sides not to escalate the conflict.

The reported clash between the two Arab nations was the fourth border incident in a month between oil-rich Libya and economically troubled Egypt.

An Egyptian military communique said Egypt's counterattack was "in retaliation for LIbyan aggression and intended to secure Egypt's western border."

The most serious of the previous clashes took place two days ago and led to the destruction of 20 Libyan militar vehicles and their crews and left nine Egyptians dead, Radio Cairo said.

Egypt accused Libya Wednesday of seeking to overthrow President Anwar Sadat by engaging in a "large-scale terrorist plot" with Moslem fanatics who earlier this month kidnaped and killed Sheikh Mohammed Zahabi, former Egyptian religious affairs minister.

Egypt and Libya announced plans to form a union in August 1972, but the merger plans soon fell through with Libyan Leader Muammar Qaddafi accusing Egypt of adopting corrupt Western ways opposed to the teachings of Islam.

In 1973 Qaddafi denounced Egypt for agreeing to a cease-fire with Israel following the October Middle East war. Sadat recently called Qaddafi a "madman."

Charges have been traded with increasing frequency over the last three years. Diplomats from both nations have been taken hostage and saboteurs executed. Libya has threatened to expel 200,000 Egyptian workers, who are vital to Qaddafi's effort to transform his desert country into a modern state.

Egypt accused Libya of inciting January's food price riots and of backing a fanatic Moslem group accused of attempting to overthrow the Cairo government. Dozens of bombings in Egyptian cities during the past two years were blamed on Libyan agents.

Egypt also charged that the Soviet Union was providing large numbers of advanced weapons to Libya. The Egyptian press has linked the Soviet arms to Moscow's growing influence in Angola and Ethiopia and the Libyan involvement in Zaire, charging that there is a grand Soviet design to encircle Egypt and its southern ally, Sudan.

The London-based International Institute of Strategic Studies says Egypt's armed forces have about 341,000 men, with 120,000 in paramilitary forces and half a million in the reserves. The institute says the Libya armed forces have 29,700 men with an unknown number of reservists.

Both Egypt and Libya have Soviet-made tanks and Mig aircraft. Egypt expelled its Soviet military advisers in 1972.

Egypt spends about a quarter of its gross national product on defense, but would find it difficult to conduct a prolonged conflict. Oil-rich Libya spends only 1.7 per cent of its gross national product on defense, but could easily buy more arms.

[TEXT OMITTED FROM SOURCE] points designated by a joint Kuwait-Iraq commission during a meeting Tuesday night," the official said.

Another commission will be set up to draw "a final borderline," the radio added.

Iraq has long claimed sovereignity over Kuwaiti terriroty. The claim was dormant when the oil-rich sheikhdom was under British protection but was renewed when Kuwait became independent in 1961.