Hard-line Arabs seeking to frustrate the Camp David agreements focused on ways of strengthening their own tarnished military credibility yesterday in hopes of detering wavering Jordan from succumbing to American pressure to join the Middle East peace process.

That goal - rather than any direct military confrontation with vastly superior Israel - was at the center of the second day of summit talks among Algeria. Libya, the Palestine Liberation Organization, South Yemen and Syria.

With Syrian newspapers openly warning of "Arab collapse" unless the summit enhanced the anti-Egyptian group's credibility, one senior participant said: "It's a rivalry between us and the United States for King Hussein's favors."

Encouraged by Jordan's declaration two days ago that it does not feel bound by the Camp David accords a PLO official nonetheless warned: "If we collapse, it will be easy for the king to join in."

Symptomatic of the conference's nervousness over Secretary of State Cyrus Vance's efforts to win over Jordan were conference rumors the United States had threatened Hussein with an agonizing reappraisal of the longstanding close relations between the two countries unless he joined the peace talks.

The summit's immediate hask, however, was to shore up Syria, which is the only state present here directly bordering on Israel. The hard liners' record since they first met in Libya following Sadat's visit to Israel last November is hardly encouraging.

Virtually none of the resolutions adotped then have been honored, especially those pledging a unified front and defense pact.

Arab public opinion was scarecely impressed by the "Front for Steadfastness and Confrontation" when the Israelis invaded southern Lebanon last March. Despite a clause pledging that an attack on one signatory was to be considered on attack on all the four states did nothing to help the Palestinian guerrillas.

Under discussion at the meeting were practical steps to set up functioning machinery for military, political and economic cooperation among the members.

Despite last year's embarrassing spectacle in Libya, when Iraq walked out of the first such summit, the participants here were trying to win over the Baghdad regime. Libya's Col. Muammar Qaddafi is reported auxious to recruit Iraq if only to have another oil-rich regime share the financial price of making the hard liners credible.

But the conference was clearly preoccupied with keeping Jordan out of the peace process, and thus frustrating the Camp David agreement's plans for a West Bank settlement.

As distasteful as the PLO finds the now 11-year-old Israeli military occupation of of the West Bank and Gaza, it views that condition as preferable to the profered Camp David deal which would exclude the organization and rule out an independent Palestinian state forever.

Both conservative and radical Palestinians pledged to step up terrorist attacks against Israel proper. George Habbash, leader of the Marxist Popular Front for the Liberation of Palestine, meanwhile reiterated his long-standing threat to blow up American oil installlations in the Middle East.

However, cooler Palestinian leaders expressed their satisfaction with Saudi criticism of the Camp David agreements and it seemed unlikely the Palestinians would enrage Riyadh by attacking th oilfields.