Syrian President Hafez Assad said tonight that the U.S. proposals presented to him by Secretary of State Cyrus Vance contain nothing that improves the prospects for a Geneva peace conference on the Middle East this year.

Assad virtually rejected Egyptian President Anwar Sadat's suggestion that a "working group" of Arab and Israeli ministers meet in the United States this fall to prepare for a Geneva conference. The Syrian leader said such a working group could set back rather than enchance the chances for peace.

If the working group should fail. Assad said, "it would have the same results as if a Geneva conference failed. It is better that we go to a Geneva conference after through preparations.

There is a possibility that the working group would be looked upon as competition for Geneva, and none of us would like that.We do not see the benefit of the working group."

In a somber and generally pessimistic report to American journalists after 3 1/2 hours with Vance, Assad blamed Israel rather than the United States for the lack of diplomatic progress. He praised the Carter Administration for its efforts, and several times appeales to it to persevere.

Vance had little to say after the meeting, which was considered among the most important of his drive to start comprehensive negotiations between Israel and the Arabs.

"We have differences of view on a number of items," Vance said. He said "We are still working" on the Palestinian-representation question, the main roadblock to Arab-Israel negotiations. At the same time, he said. Syrian-American relations are "fine" and his spokesman said the meeting with Assad was warm".

At the end of his meetings with the leaders of Egypt and Syria, the two states that went to war with Israel in 1973, there is no sign that Vance has been able to make strides toward solution of the Palestinian deadlock, and no public indication that the U.S. proposal have narrowed the substantive gap between the Arabs and Israel.

Assad's rejection of the "working group" appears to lay to rest the Egyptian suggestion, which was never considered a likely possibility by U.S. officials. Vance devoted 20 minutes or less of his five hours of discussion with Sadar to the working group idea, and was surprised and dismayed that it became the main focus of his joint press conference with Sadat at Alexandria and of daily news reports since then.

Vance unintentionally fed speculation by politely calling it "an excellent suggestion in the joint press conference after Sadat had introduced it before the cameras in his opening remarks.

As soon as he realized that the suggestion was arousing worldwide hopes and speculation, Vance passed word to reporters that he felt that it should not be given major emphasis and he began edging away from the proposal in public and in private. The press, with little else to write and broadcast kept "working groups" near the top of the news even after it was clear to many reporters that the suggestion was doomed or meaningless or both.

Syrian leaders, who would have had to approve were annoyed that Sadat had told them nothing of his plan in advance and distrustful that the Palestinian cause would be protected.

After Israel approved "working groups" without the PLO. Egypt itself began backing off. The semi-official Cairo newspaper Al Ahram today quoted Egyptian officials as saying that joint Arab-Israeli "working group" meetings were never intended - although Sadat plainly implied this intent in his press conference with Vance Tuesday night.

With Sadat believed to the desperately eager for a Geneva meeting to bouy his position in Egypt. Syria's Assad has emerged as the main protector of the PLO in the diplomatic bargaining. Although the Syrian army was figthing and killing PLO commandos in Lebanon less than a year ago, the relations are now repaired and PLO chairman Yasser Arafar is reported to have said this week that he had closer relaltions with Syria than with any other Arab country.

In a government statement isssued after talks wtih Vance and in his remarks to reporters tonight. Assad said any Arab-Israeli peace must be based on complete Israeli withdrawal from Arab territory occupied in 1967 and on insuring the right of the Arab people of Palestine. He charged several times that Israel's refusal to accept the rights of Palestinians, as defined by United Nations resolutions, is the fundamental block to diplomatic progress. He said the question of PLO representation is a lesser, procedural difficulty.

At one point he said that if Israel would recognize the rights of Arab Palestinians and respond to their desires without having discussions with their representatives. "I estimate that the PLO would not find anything disturbing to it in this." Despite several leading questions, he did not entirely close the door on Geneva discussions without the PLO if Palestinian rights are observed.

As a courtesy to Sadat and Assad. Vance may make brief stops of an hour or so each in their capitals after visiting Israel next week and before leaving the Middle East for home.