President Anwar Sadat, backed by a pledge of support from the army, announced yesterday that he will sign peace treaty with Isreal in two months despite protests from Ara radicals and strong reservations from moderates.

Sadat said he is ordering a shakeup of the Egyptian government and demobilizing some army units "because of the battle of liberating (the occupied lands) is over."

"This complete change is intended to answer to all needs of the population, end administrative routine, revolutionize the adminstration and stimulate the enthusiasm of the people in the next stage," Sadat was quoted as saying in the well informed Egyptian newspaper Al Ahram.

Although Sadat did not mention it, the move also seemed designed to assure him of support within his government by getting rid of any officials who oppose his peacemaking efforts. Foreign Minister Mohammed Kamal resigned after the Camp David accords over the weekend, apparently unwillingly to carry out Sadat's policies.

Sadat defended the peace accords as a triumph for Egypt and the Palestinians, and said he would go ahead with implementation despite the objections of Jordan and Saudi Arabian and the condemnation of hardline Arabs meeting in Damascus.

Sadat's remarks were made at separate meeting in Washington with American editors and Egyptian students enrolled in American universities.