Israel today expressed its willingness to discuss substantive issues with the Arabs through Egypt or other concerned states, as part of the advanced preparation for a Geneva peace conference.

"Both Israel and Egypt understand that is advisable to prepare for Geneva in matters of substance," an official said here, "and therefore the dialogue that will be conducted will be deal with substance."

The statement represents a subtle but importance shift in Israeli policy. Various Arab leaders, such as Egyptian president Anwar Sadat and King Hussein of Jordan, have stressed that a Geneva conference must be well prepared in advance with many, if not all, agreements worked out ahead of time. To do otherwise they contend, would risk a stalemate or a breakdown of the Geneva conference that might be worse than no talks at all. President Carter originally backed this view and, in State Department parlance, it was called "Geneva up."

Israel, on the other hand, tok the position that both sides should simply go to Geneva, put their maximum demands on the table and negotiate from there. The concept of an unprepared Geneva conference was called"Geneva down."

Israel's willingness to accept the Geneva up concept in the wake of Sadat's visit was explained by an official as consistent with Israel's reluctance to discuss matters of substance with intermediaries. Since Sadat removed the necessity to talk through intermediaries. Israel no longer has any reasons to object to discussing substantive issues as preparation for Geneva.

Whatever the reasoning, the Israeli shift on this matter enhances the chances of reconvening to peace talks and also reflects an Israeli change in thinking on the chances of a Geneva conference producing any results.

However, no date for a Geneva conference or even for the next round of Israeli-Egyptian dialogues could be set because Sadat made it clear that Egypt would not speak just for Egypt alone, officials said.

"Egypt does not want to go to Geneva alone," one Israeli official said and therefore Israeli is giving Egypt the necessary time to persuade the other Arab states, now bitterly divided to accept Sadat's concept and initiative.

Israeli Prime Minister Menahem Begin, following today's Cabinet meeting to discuss the Sadat visit, denied that a timetable for the continuation of contacts between Egypt and Israel had been set that a date to reconvene Geneva had been upon or that there had been any change in Israel's position on the question of Palestinian representation at Geneva.

Other officials denied questions of how to reconvene the Geneva talks had been discussed during Sadat's visit. They denied that any agreement was reached on who should represent the Palestinians. The America-Israel working paper had not been discussed, they added.

Israeli Foreign Minister Moshe Dayan's television interview yesterday, in which he said the time was coming when Israel would have to reconsider its position on the question of making concessions on occupied territories, was made in full consultation with the prime minister, official sources said today.

Israel may not as yet have decided on which positions it should change. Much depends on whether Sadat can bring the other confrontation states into the new dialogue, but the recognition that Israel may well have to abandon some of its more dogmatic concepts is picking up public support here.

If Dayan had Begin's full support for his remarks yesterday, it raises the possibility that Dayan may end up acting as point man for Begin in the mine fields of Begin's own ruling party, especially in Begin's faction which is more dogmatic and hawkish than other elements in the ruling coalition government.

Dayan has no political base of his own. He abandoned the opposition Labor Party to become foreign minister. He can afford to say unthinkable things that Begin might be reluctant to say or perhaps, in the end approve.

But Begin picked Dayan to be his foreign minister for his flexibility and pragmatic approach, which Dayan has often demonstrated, and not for his adherence to the ruling party's dogmas.