Negotiations on a peace treaty between Egypt and Israel came to a halt last night, just hours after the Israeli Cabinet approved the draft agreement, when the head of the Egyptian delegation was recalled to Cairo for "consultations."

The brief announcement carried by the official Middle East News Agency did not say the talks were being suspended. But with the head of Egypt's delegation, Defense Minister Kamal Hassan Ali, returning to Cairo to join acting Foreign Minister Boutros Ghali, there are no Egyptians remaining in Washington who any real negotiating authority and the Egyptian move is tantamount to a suspension of the talks.

Work on the treaty, according to the participants, is all but concluded, and all the major issues between Egypt and Israel have been settled, but the 11th-hour hitch in the process that began with Sadat's journey to Jerusalem last year was caused by the same issue that has bedeviled the Middle East for decades, the Palestinian question.

Egypt is demanding that the peace treaty include or have attached to it a timetable for implementation of the formula for Palestinian self-rule that was worked out in the Camp David agreements in September.

The decision to bring Ali home was announced several hours after the Israeli Cabinet voted overwhelmingly to reject that demand. Both the Israeli decision and the Egyptian response had been widely anticipated here.

Sadat met yesterday with Vice President Hosni Mobarak, who returned two days ago from Washington, and with Prime Minister Mustapha Khalil. Their decision to bring home the head of the delegation was made at the meeting, even before the Israel decision was announced.

Sadat said last week that it might be necessary to break off the talks for a while to give the Israeli a chance to reconsider their position. He has not suggested that the position to be reconsidered might be that of Egypt. The Egyptian president predicted that if the negotiations were broken off, they would be resumed quickly at Israel's request, but independent observers here believe that a new move by the Americans may be needed to break the impasse.

Egyptian officials from Sadat down have been saying that suspension of the negotiations would not mean an end to the quest for peace and that signature of a treaty is still possible, even likely, before the end of the year. But the Egyptians are determined to show that they are not in such a hurry for peace that they will retreat from their position on the Palestinian question.

Sources at the Foreign Ministery say that this is an almost inevitable stage in such a difficult series of negotiations between old foes, and that once the two sides have demonstrated their determination, a process of compromise will resume. But it is difficult to visualize a compromise between the positions that Egypt and Israel have taken.

Israeli Prime Minister Menachem Begin has insisted that Israel would not accept the kind of timetable sought by Sadat. The Egyptian leader has said he would not sign a treaty without it.

In an interview recorded Saturday and broadcast Monday by French television, Sadat said, "If we don't link the Gaza and the West Bank in the comprehensive settlement, then when we sign the Egyptian-Israeli settlement it will be a separate agreement. I am not ready to sign it."

That was a capsule formulation of Sadat's position on a complex and frustrating issue that was delicately skirted at Camp David because Egypt and Israel have different ideas of how to deal with it.

Both sides have agreed that the Palestinians of the occupied West Bank and Gaza are to have self-government after a five-year transition period. But it is not specific when the elections that begin that five-year period are to be held, or who may run in them.

Both Egypt and Israel fear that Palestinian opposition to Camp David might make the implementation of those provisions difficult, if not impossible. Therefore, the Israelis want to go ahead with a bilateral peace with Egypt, without having to worry about the peace breaking down, if there is a long delay in changing the situation in the occupied territories.

The Egyptians take the opposite tack - that if the Israelis are not pinned down now to a timetable, they may procrastinate indefinitely, and therefore the bilateral treaty must include some provisions specifying the dates to the Palestinian self-governing authority to be set up.

Sadat said in his interview that the remaining obstacles to a treaty "are of no significance and could be surmounted easily." But he has also described the impasse as "a crisis" and said his peace initiative is at "a turning point."

Sadat decided to bring his delegation home and suspend the talks because of the "linkage" impasse two weeks ago, but was persuaded by a personal phone call from President Carter not to do so. The United States has since offered a compromise formula on the issue that the Egyptians say they were willing to accept but the Israelis rejected.

Last night's terse announcement did not say whether the other members of the Egyptian delegation in Washington would also be returning, or when Ali would leave for Cairo.