Leftist armed forces in Afghanistan overthrew President Mohammed Daoud yesterday in a bloody battle with troops loyal to the president, according to Kabul Radio.

The radio announced that Daoud, 69, "is gone completely and forever," implying that Daoud had been killed.

A State Department source said initial signs suggested that the revolt was being led by a group of army and air force officers "who could be considered pro-Soviet."

According to reports from foreign diplomats based in Kabul, capital of the impoverished Central Asian country, heavy ground and air fighting was continuing in the predawn hours today. Late last night, a junta calling itself the Military Revolutionary Council claimed to be in complete control of the country.

The State Department source cautioned, however, that this was not yet confirmed. "They could very well be in charge of nothing more than the radio station," the source said.

A U.S. source reported that helicopters and planes were making passes over Kabul throughout the night. "We're expecting some military reaction tomorrow morning," the source said, but he refused to elaborate.

If it becomes clear that the rebels favor closer ties with Moscow, repercussions from the coup could almost certainly be expected from two of Afghanistan's neighbors, Iran and Pakistan. The Soviet Union and China complete the ring around the land-locked nation.

The government-run radio announced that air force Col. Dagarwal Abdul Khadir had been named head of the revolutionary council.

Daoud come to power in a coup in July 1973, overthrowing his cousin and brother-in-law, King Mohammed Zahir Shah, when the monarch was vacationing in Italy. At the time, Daoud was welcomed by most Kabul residents since he followed a regime that was generally viewed as decadent.

According to diplomatic messages, the coup began in the capital about noon when as many as 50 tanks rumbled through the dusty streets - where camel caravans still plod regularly - and Soviet-built Mig21 jets strafed and rocketed the airport. One or more stray shells reportedly did severe damage to the French consulate.

Diplomats reported that an unknown number of bodies lay in the streets near the presidential palace, where Daoud lived and worked. There was a rumor that Daoud had taken refuge in the France embassy compound.

What triggered the coup was unclear late last night. However, on Wednesday, the government radio announced that seven Communist politicans had been arrested following an antigovernment demonstration several days earlier.

They had led some 15,000 people in a funeral procession bearing the body of Communist leader Mir Akbar Khabir, who was killed April 17, past the U.S. embassy, denouncing the Central Intelligence Agency.

Khabir was the leader of the Khalq, (Masses) Communist faction. One of yesterday's broadcasts said that the coup had been carried out "in the name of the masses."

As far as could be determined, the head of the Afghan armed forces, Gen. Haider Rasuli, who was also Daoud's defense minister, remained loyal to the president throughout the fighting.His fate was not yet known.

The outburst came as a surprise to U.S. diplomats, who believed that Rasuli was in complete control of the armed forces, largely armed and trained by the Soviet Union over the years. The State Department also believed, as one department source put it, "that Daoud had his act together."

However, the anti-Communist government of Iran's Shah Mohammad Reza Pahlavi has been warning for some time that the Soviet Union was agitating for a way to remove the neutralist Daoud. Iran has long feared that a pro-Communist government in Afghanistan could lead to tribal unrest on the Afghan-Iranian frontier.

Pakistan's fundamentalist Moslem government would also be expected to be upset by any move toward Moscow by Kabul. Afghanistan and Pakistan have long been embroiled in a border dispute.

The Soviet Union has a long history of intrigue and deep involvement in Afghanistan. In czarist days, the Russians played what Rudyard kipling referred to in "Kim" as "The Great Game," struggling with Britain with Britain for influence in Afghantan. The Russians' goal was to win control of an overlandd route to a warm water port on the Arabian Sea coast.

Even before Daoud came to power, Afghanistan had successfully played off the Soviet Union against the United States. At times swaying closer to Moscow and at times seemingly moving toward Washington, the Afghans managed to squeeze maximum economic assistance from the two superpowers.

U.S. Ambassor Theodore Kiliot reportedly called on all Americans in Kabul to remain indoors during the fighting. No casualties among resident Americans have been reported. Kabul airport was reportedly closed and a curfew imposed on the city.

Former vice president Nelson Rockefeller, his wife, Happy, and a party of nine were spending the night at the Pakistani frontier town of Peshawar, adjacent to the fabled Khyber Pass leading into Afghanistan. The Rockefellers, who dined Tuesday night with Pakistani leader Gen. Ziaul Haq, were supposed to travel through the pass to Kabul today.