The Palestine liberation Organization has formally accused Iraq of subverting the Palestinian cause through its support of an internationally known Palestinian terrorist called Abu Nidal and has demanded that Iraq turn him over to the PLO for trial.

A strongly worded statement distributed by the Palestinian news agency Wafa, said that the PLO executive committee had delivered an official protest about Abu Nidal, who is based in Baghdad, to the Iraqi Embassy in Damascus on July 4.

It is unusual for the PLO to openly criticize a country like Iraq, one of the most uncompromisingly anti-Israeli of the Arab states. Palestinian sources here said, however, that the main guerrilla organization. Fatah, headed by Yasser Arafat, has been chafing for some time over Iraq's support for Abu Nidal, once an ally but now a foe of Arafat.

Abu Nidal is already under a death sentence imposed by Fatah for a 1973 terrorist operation that Fatah says was done in defiance of Arafat.

The PLO statement said Abu Nidal was responsible for three highly publicized murders in the past year - those of Said Hammami, the PLO representative in London; Ali Nasser Yassin, the PLO representative in Kuwait, and Yussef Sebai, an Egyptian journalist whose slaying in Cyprus in March further worsened Egyptian-Palestinian relations.

This PLO action does not constitute a formal break between the PLO and Iraq, and there has been no official Iraqi response. But it does represent another rift in the ranks of the Arab states and organizations most adamant in their policy toward Israel and in their denunciation of Egyptian President Anwar Sadat's search for a negotiated peace with the Jewish state.

It is considered highly unlikely that Iraq will grant the PLO request to turn over Abu Nidal, who is suspected of doing the international dirty work of the ruling Iraqi Baath Party as well as his own.

The significance of the PLO statement lies more in the split between the Palestinian leadership and the Baghdad regime, which has long considered Arafat too willing to compromise with Israel.

Palestinian officials also believe Iraq is trying to undermine Arafat and his allies in the PLO leadership because they are de facto allies of Syria. Iraq's implacable ideological enemy. All three - Iraq, Syria and the PLO - oppose Sadat's initiative, but cannot agree among themselves on what strategy to follow.

The Palestinian leadership, the PLO statement said, has "always wanted to maintain good relations with Iraq but we are now impatient. Therefore we demand that the Iraqi government hand over Abu Nidal so that he would get what he deserves."

Iraq, the PLO charged, has fallen into the trap of supporting "crimes" that play into the hands of the enemies of the Palestinian cause. The Iraqis should follow the PLO line, it said, which is to stay away from violence and acts of terrorism that are not aimed directly at "the Zionist enemy."

Abu Nidal, a native of Jaffa in what is now Israel, is probably one of the two most wanted figures in world terrorism, along with the man known as Carlos.

His real name is Sabry Banna. Abu Nidal is a Palestinian nom de guerre meaning "father of struggle." He was an early leader of Fatah along with Arafat, but broke away about eight years ago to form his own organization, operating out of the Iraq capital.

In addition to the slayings listed in the PLO communique, Abu Nidal he has been linked to commando attacks on hotels in Amman and Damascus and two attempts to kill Syrian Foreign Minister Abdel Halim Khaddam. He preaches revolution to the conservative sheikhdoms along the Persian Gulf and to Saudi Arabia through a Bagdad radio station called "Voice of Palestinian Revolution."

Abu Nidal, in interview recently with a London magazine, The Middle East, denied any involvement in terrorist incidents in Europe and rejected airline hijackings as "not useful." But he did claim responsibility for "the devastation of the Abqaiq," a reference to a major Saudi Arabian oil field explosion and fire last year for which the cause has not been officially established.

"If our first priority is the struggle the interview "our next priority is the the interview 'our next priority is the destruction of the reactionary regimes in Syria, Jordan and Lebanon." He said Arafat will end up in the rubbish bin of history."

In a recent interview with Newsweek, the Iraqi leader, Saddam Hussein, said that "certain factions of the Palestinian resistance get our assistance without any interference in their aims and policies or the way they're carried out."