Israeli army troops broke through a barbed-wire fence yesterday and forcibly removed a group of ultranationalist settlers from an encampment that had been set up on the West Bank of the Jordon River in defiance of the government.

The settlement, established as a protest against the Camp David summit accords, was dismantled and about 150 members of the ultranational Gush Emunim movement and their sympathizers were carried away in buses.

Fighting broke out during the raid, resulting in injuries to seven protesters and seven soldiers, the government said. None of the injuries was reported to be serious.

The raid, which followed four days of defiance by the Gush Emunim of the government, was ordered by Israel's cabinet, which in a near crisis atmosphere issued an ultimatum Wednesday night for 11 a.m. yesterday.

Gush Emunim sources said the troops demolished a wooden prefabricated shed that the settlers had hauled up to the barren, rocky hillside south of the Arab town of Nablus, and dismantled water tanks, a generator and about a dozen tents.

The settlers were taken last night to a police station in Natanya for questioning, but they were expected to be released.

The army, which cordoned off the area for mile around and refused to allow reporters near the site, would not disclose how many soldiers were involved in the operation. The army unit, which for the most part was unarmed, climbed up a steep path for more than an hour to reach the settlement.

The eviction was ordered by Defense Minister Ezer Weizman after Weizman contravened an offer made by Israel Army Chief of Staff Rafeal Eitan to allow the settlers to move their camp temporarily to a nearby military base if they would leave Mount Hawara.

Last night, a group of Gush Emunim activists established another settlement in the West Bank - this one atop a hill near Hebron - and vowed to remain there until against forcibly removed by the army.

The Gush Emunim said it would continue to conduct such demonstrations on the West Bank until the Israeli government rejects the Camp David peace agreements.

Eitan's offer, which had been accepted by the settlers during the night, brought to mind a similar "temporary" Gush Emunim settlement at an army base on the West Bank - one that caused a political crisis for then prime minister Yitzhak Rabin.

In December, 1975, Rabin told the Gush Emunim settlers that they could remain in their illegal encampment at Camp Kadum for three months while the Cabinet decided on the future of its West Bank policy.

This reluctant concession by the government, which many regarded at the time as capitulation, provided the settlers with a foothold and they soon were paving roads, erecting light industry and building permanent homes. Beyond the challenge to Israeli legal authority, their presence cast doubt upon the Rabin government's sincerity when it said it was prepared to give up territory for peace. The settlement is still there.

Like the settlement broke up yesterday, the Camp Kadum encampment was named Elon Moreh, after the first settlement that Abraham made in Samaria when he led the children of Israel to the promised land.

It was at Camp Kadum where Likud leader Menachem Begin, then a candidate for prime minister, triggered a bitter dispute with the U.S. government in May, 1977, by saying that many more Jewish settlements would rise on the West Bank.

Speaking at a ceremony marking the installation of a Tora scroll at a Camp Kadum synagogue, Begin declared, "A Jew has every right to settle in these liberated territories of the Jewish land." His remark dismayed official Washington and raised fears about Israel's intentions in the West Bank, fears that linger today.

It was against this backdrop that Weizman abruptly canceled his chief of staff's offer to the Gush Emunim settlers at Mount Hawara, thereby heading off another foothold by the fundamentalist group.

Begin was said to have agonized over his decision not only because of the close ideological alliance Gush Emunim once had with Begin and his rightist Herut Party, but because in Israel military force is rarely used against Jewish protestors.

While truncheons, tear gas and water guns have been used in the past against Arab demonstrators, the Gush Emunim - regarded by many here as the "conscience of Judaism" - has for the most part enjoyed a hands off policy.

Although under Israeli law a convicted illegal settler can be sentenced to two years in prison, the brazenly determined - some say messianic - Gush Emunim "pioneers" almost always are winked at.

The group has 18 settlements, most of them in densely-populated areas of the West Bank that Israel presumably would give up if it decided to offer territorial concessions. The Gush declares openly that it intentionally selects populated sites to preclude the possibility of an Israel concession on the West Bank.

Also, it has wanted for years to build on the hills overlooking Nablus - a center of militant Arabs - to put an end to the notion that the Palestinians will ever have self-government.

Gush Emunim is estimated to have 2,500 to 3,000 members, but because of its mystic appeal, it undoubtedly has many more sympathizers.

While Begin is said to have telephoned Weizman with instructions to end the Gush Emunim defiance of the government, the prime minister has made no attempt to disguise his sympathy with the group cause. In a television interview this week, he said, "They are real pioneers, they will perhaps curse me, but I will return love."

Foreign Ministers Moshe Dayan, asked yesterday whether Palestinians Arab leaders on the West Bank will harden their position because of the Gush Emunim encampment, said, "I don't think so. I think the Palestinian Arabs know us by now quite well. They know this is an internal Israeli problem."