Israel's Cabinet broke off its debate on the compromise draft treaty with Egypt yesterday to await Egyptian President Anwar Sadat's latest proposals on linkage between the separate Egyptian-Israeli pact and the future of the Gaza Strip.

The Cabinet interrupted what was to have been the first of two key meetings on the stalled peace negotiations and announced that it was postponing discussion until it receives "clarifications" on the new Egyptian demands.

The Cabinet also canceled a session scheduled for today while it awaits reports from its Washington negotiating delegation on what Egypt is seeking in the new proposals. Egyptian Vice President Hosni Mobarak traveled to Washington yesterday to deliver the proposals to President Carter.

Prime Minister Menachem Begin, according to Cabinet sources, is firmly opposed to the United States' compromise proposals that Egypt and Israel commit themselves to holding elections for the West Band and Gaza Strip Palestinians a year after signing the treaty.

He announced yesterday in a terse statement:

"According to the latest reports receifed, Egypt is about to submit new proposals or demands related to negotiations between the two countries. These reports are not yet official and complete. In view of this fact, the Cabinet has decided to hold the political debate after it has received all the necessary clarifications concerning the new additional positions of Egypt."

Foreign Ministry officials expressed bafflement over the reported Egyptian demands, saying that they are unsure whether they represent a softening or hardening of Sadat's position.

One interpretation here is that it is a hardening because it means Sadat is no longer asking merely for Palestinian autonomy in the Gaza Strip, but is seeking a legal Egyptian standing in that occupied territory.

By reestablishing Egyptian administration in the Gaza Strip, some government officials note, Sadat would demonstrate to the Arab world that he was not signing a peace treaty with Israel solely to regain the Sinai Peninsula.

A contradicting interpretation was that Sadat has become impatient with Jordan's King Hussein and the West Bank Palestinians for refusing to participate in West Bank talks, and that he turned his attention to the Gaza Strip as a way of applying pressure on the intransigents to join the Middle East peace process.

In any case, Israeli officials said that the Middle East framework for peace signed at Camp David provides for autonomy for both areas in tandem, and that there never was any intention to isolate one from the other.

When we were talking about autonomy, we were talking about the West Bank and Gaza," a Foreign Ministry official stressed.

Begin, facing increasing pressure from the right wing of his Likud coalition over recent Egyptian negotiating maneuvers, was said to be prepared to reject the U.S. proposed timetable for holding West Bank elections.

The prime minister has sidestepped questions on his position, but he is understood to have informed Cabiniet ministers that agreeing to a specific timetable would be a mistake becourse it would not take into account unexpected developments along the way.

Moreover, Begin reportedly has said privately that if Egypt and Israel fail to agree on the implementation of autonomy after 10 months, Egypt might use linkage between the two treaties to slow down normalization of relations between the two countries.

In the Knesset yesterday, several Likud coalition members led a demonstrations with a banner proclaiming, "the Israeli government is on the brink of an abyss - stop."

Also, five coalition members of the Knesset Foreign Affairs and Defense Committee submitted a resolution that the government should not commit itself to a link between the treaties. The committee chairman disbanded the meeting after several members complained that they did not want to tie the Cabinet's hands."