The sudden incursion of armed Chinese fishing boats into island waters claimed by Japan has set back at least temporarily the two countries' once-promising effort to negotiate a peace treaty.

Japanese officials, annoyed and somewhat confused by the unexpected intrusion, said yesterday that no progress on the peace treaty could be made until the episode is settled.

The Chinese action, however, may reflect annoyance in Peking over Japan's protracted deliberations about the treaty.

Apart from domestic political considerations, the Japanese apparently have been reluctant to embrace the pact that contains an "anti-hegemony" clause committing the two countries to resist domination in Asia by one country.

The word "hegemony" and China's insistence that the clause be a part of the pact clearly indicate that it is directed against the Soviet Union. Moscow has warned Japan it should not accept such a clause.

The incident also has played into the hands of the right wing of Prime Minister Takeo Fukuda's Liberal Democratic Party, which was already conducting a vigorous delaying action to interrupt treaty negotiations just when it appeared they would succeed.

Fukuda expressed concern Thursday about the incident and instructed ministers to deal with it carefully to avoid, if possible, any worsening of relations with China.

Foreign Minister Sunao Sonoda said, however, that no further progress could be made on the peace treaty until the question of the alleged territorial violation is solved.

About a dozen Chinese fishing boats entered the waters around the tiny, barren Senkaku Islands on Wednesday. Despite Japanese warnings, their numbers had at least doubled by Thursday morning. Some of the boats were armed with machine guns, according to Japan's Maritime Safety Agency, which is monitoring the fishing fleet from ships and planes.

Japan lodged a protest Thursday with the Chinese Embassy here and received a curt reply declaring that the Senkaku Islands are historically part of Chinese territory.

The Taiwan government also claims the islands as part of Chinese territory.

Japan yesterday made a higher-level protest in Peking, asking that the boats be ordered out of its territorial waters.

The small uninhabited islands lie within 250 miles of the coastlines of China, Japan and Taiwan and are officially claimed by all three countries. Japan maintains that any vessel entering a 12-mile zone around the islands must have its permission for fishing.

Their ownership has been disputed for years and some experts have viewed them as having potential for serious trouble because they are believed to be located in an area of large undersea oil deposits.

None of the countries has sought to assert their ownership seriously for some time, however, and the islands only use has been as firing targets for U.S. Military forces in northeast Asia.

The timing of the fleet's intrusion puzzled Japanese Foreign Ministry officials. It was believed to reflect Chinese annoyance with what seemed to be foot-dragging on the part of the Fukuda government in completing negotiations on the peace and friendship treaty.

A month ago, it appeared likely that the treaty would be ready for signing this summer after years of deliberations. Foreign Minister Sonoda was scheduled to go to Peking early this month to conclude the negotiations.

His visit was cancelled however, because Fukuda has been unable to obtained a consensus within his own party-Right-wingers in the Liberal-Democratic Party oppose closer ties with Peking, even though a majority of the party and most members of opposition parties have given the treaty their blessings.

By purposely raising the Senkaku Island issue at this time, China has given Fukuda'ss right-wing opponents new leverage with which to oppose the peace treaty. Those opponents, gathered in the party's Asian problems Study Group, have asserted that Japan should not pursue the treaty with China until the Senkaku Island controversy is settled. Sonoda had hoped to negotiate the treaty first and then hold separate talks on the island issues.TJapan claims that its right to the islands and their 12-mile fishing zone goes back to the Sino-Japanese war of 1894. It also insists that those islands were included when the United States returned Okinawa and other islands to Japan in the Reversion Treaty of 1971. The Reversion Treaty did not mention the Senkakus specifically, but Japan insists it embraced all islands over which the U.S. had exerted administrative control since World War II.