Senior Israeli leaders mounted a major diplomatic offensive yesterday to counter Egyptian President Anwar Sadat's assertion that Israel is blocking the road to Middle East peace.

Prime Minister Menachem Begin in Geneva and Foreign Minister Moshe Dayan in New York underscored their appeals for Western public support with expressions of Israel's willingness to continue negotiations with Egypt.

But Begin cautioned the Carter administration that any sale of U.S. offensive weapons to Egypt "would have a very negative effect on the very peace-making process in which the United States is so interested."

Rejecting charges of Israeli intransigence, Begin said his peace plan remains on the table. He also hinted that a formula may be found for solving the difficult problem of Israeli settlement and military bases in the Sinal.

Dayan, in an emotional speech to the conference of presidents of major American Jews to stay out of the Middle East negotiating process. The Israeli government, he made it clear, did not want American Jews telling it what posture it should take at any bargaining table.

Begin and Dayan, whose visits are keyed to a new drive to ralse money from major Jewish business leaders and contributors in Western Europe and the United States, clearly sought to counter what is generally believed to be a favourable impression made by Sadat since his Jerusalem trip in November.

Sadat's visit to the United States and the many headlines it has generated - including his speech Monday to the National Press Club in which he declared, "I have given Israel everything" - prompted a somewhat defensive tone in the remarks of the Israeli leaders.

Apart from asking for sophisticated U.S. weapons, Sadat's principal theme has been that Israel was stalling and destroying the peace process and that it was up to Washington to persude Israel to alter its policies.

Begin, who started a three-day visit to Switzerland yesterday, voiced the hope that there would be understanding in the United States on the effects of U.S. weapons sales to Egypt.

He took a positive view of the prospects for eventually settling the disputes that have shattered some of the early optimism and he emphasized that the Egyptian-Israeli military talks are continuing.

Begin also expressed the hope that it would be possible soon to reconvene the political talks that were broken off last month by Sadat.

When Sadat broke off the talks, he expressed anger at what he viewed as Israeli failure to make any concessions to follow up his dramatic Jerusalem journey. It is a theme Sadat has struck continuously since then.

Begin refrained from any personal attack on Sadat or criticism of the Egyptian's visit to the United States in his talk with reporters.

But in contrast to Begin's restraint, Dayan made sharp references to Sadat and also was adamant in his defense of new Israeli settlements on occupied Arab land. On Tuesday, the Carter administration reaffirmed its strong opposition to these "illegal" Israeli actions.

"I think we are right about it. We have done nothing wrong," Dayan said in reference to the settlement issue. He said Israel had never promised President Carter that it would put specific limits on new settlements.

"The main point," Dayan said about the Israeli-Egyptian negotiations, "is if we agree, which we don't to everything (Sadat) asked us to do in Sinai . . . would he make peace with us?"

"No," Dayan said. "Sadat has told Israel that he would say no," Dayan added.

Dayan returned to this point over ans over again during his hour-long off-the-cuff speech.

"What is the purpose of asking us, Why don't you agree to this and why don't you agree to that and why don't you maje more concessions" if Sadat will not sign a peace treaty with Israel, Dayan asked.

Israel is prepared, Dayan said, "to be very very forthcoming" in any negotiations "but not to be in the position to grantion unconditional surrender."

"The only way (to peace) is negotiations, not just going around saying the Israeli should do 'a' and 'b' and 'c'," he said.

In one of the emotional high points of his address, Dayan declared of Sadat: "He is not the president of Israel. He cannot grant us our security. He thinks he can tell us what would be our security, but it is not him and not even your country, ladies and gentlemen, it is the government of Israel that has responsibility for the security of Israel."

There appeared to be a difference in emphasis between Begin and his foreign minister on the controversial issue of Israeli settlements.

Dayan stressed that the only Israel promise to Carter on settlements was that any new ones would be within military camps for the 12 month period beginning last October. He said Israel informed Washington that three settlements would be authorized in the period January-March and that they will be within military camps.

The situation at one of these settlements, at Shiloh, has been misunderstood, he said. But he drew a murmur from his Jewish audiences when he declared his pride in the young Israeli who want to settle in an inhospitable place like Shiloh.

"I admire them rather more than I admire Israelis who go to live in Canada and Zionists who do not come to live in Israel," Dayan said pointedly.

Begin also reaffirmed his view that Jews "have a perfect right to settle" on occupied territories.

But on the presence of Israeli settlements and military bases in the Sinai, the Israeli leader appeared more flexible. He said Israel has been attacked five times from the Sinai dessert and "we want to set up a defense line between our country and the dessert."

Asked what he meant by such a line, Begin spoke of "transitional period during which there will be phased arrantements." Later he described the transition period as a time "until we know there is real peace between us and that is a matter of a few years."

In effect, Begin appeared to suggest that Israel would consider withdrawing from its defense posts in Sinai over a transition period.

The Israeli prime minister use strong language only when discussing the other main stumbling block to peace - creation of some form of a Palestinian homeland.

Again in contrast to his foreign minister, Begin sought to leave a positive impression during his hour-long press conference in Geneva.

He called for patience to heal old wounds. There is, he said, "reason to believe the peacemaking process will go on," that a sense of patience was needed as well as a sense of urgency, and that "with that measure of patience there is hope that an agreement will be reached."

People must not expect settlement of complex and emotional issues in a matter of days or weeks, he said. "What I suggested is a chance to negotiate seriously, perhaps several months. We have just really started."

He rejected "the assumption" raised by journalists that public support for Israel in the United States and Western Europe has diminished as a result of Israeli quarrels with Sadat.

Dayan, who is in the United States for a 10-day visit that is expected to include a meeting with Carter, spoke in strident tones.

The Israeli foreign minister arrived in White Plains Tuesday night by private plane from Montreal because New York's airports were closed due to the storm that wracked the region. He told the audience, "I hope no American Jewish group will try to help the (carter) administration to mediate between Egypt and Israel."

In defending the new Israeli settlements, he repeatedly explained that the legality or illegality of an action is not the controlling factor in a world that is "not run by a high court."

"No one's going to take care of you," he said defending Israel's refusal to make concessions to Egypt without a peace treaty. Without a guaranteed peace, he implied, Israel is not going to make any concessions that its government believes endangers its security.

Despite his obvious concern that Israel was being portrayed as the obstacle to peace, Dayan said he still believes a Sinai agreement with Egypt is attainable. And he repeatedly urged Egypt to agree to negotiate without preconditions on all the specific problems of a Sinai settlement.