Israel today released a text of what is generally viewed here as the core of its proposed peace treaty with Egypt. The surprise move followed Egypt's earlier publication of the draft treaty without any reference to a document on normalization of relations between them.

While the draft treaty focuses on Israeli withdrawal from the occupied Sinai and the specific peace terms and boundaries, Annex III spells out publicly for the first time the essence of what both countries have been striving for after three decades of an implicit state of war.

The unexpected Egyptian disclosure of the draft treaty presumably was designed to show Arab critics that Egypt was not negotiating a separate peace. Israel's followup disclosure of what is here the most popular aspect of the 12 months of negotiations presumably aims to placate hard-line critics who have attacked the peace talks as a form of "giveaway" by Israel.

The annex provides for borders opened to trade and tourism, an end to economic boycotts, an exchange of embassies, cultural exchanges, free shipping on the Suez Canal, cross-border aviation traffic, highway, rail and telecommunications links and a full range of legal and political ties between two historically hostile peoples.

Almost parenthetically, the annex addresses in its next-to-last article what once was though impossible by two countries that have fought five bitter wars - the mutual respect of each others' human rights and freedoms.

"The parties affirm their commitment to respect and observe human rights and fundamental freedoms for all. And they will promote these rights and freedoms in accordance with the United Nations charter," the annex declares.

But characteristically, the sweeping agreements on mutual trust and friendship were made public amid no small measure of acrimony and mistrust.

U.S. State Department spokesman George Sherman was quoted by Radio Israel as saying he was "astonished" that Israel had publicized the draft compromise treaty and the annex covering the normalization of relations.

Israel, in turn, reported through high-ranking officials that it was Egypt, after all, that released the treaty text yesterday in the semi-official Cairo newspaper Al Abram.

Israeli Foreign Minister Moshe Dayan said tonight that the release of the annex dealing with normalization of relations was a natural sequel to that.

The reaction by Sherman, Dayan said, apparently resulted from a "misunderstanding" of what was to be published by each country in advance of a signing.

Deputy Prime Minister Yigael Yadin tonight added some fuel to the controversy by accusing Egypt of "Mutilating" its text of the draft treaty by omitting a key sentence from the "priorities clause," which states that the Egyptian-Israeli treaty will supersede in priority any agreements between Egypt and other nations.

"There is no harm in this Annex III in comparison to the main body of the agreement.Actually, it just explains how the normal relations will be executed," Yadin said.

In fact, the document may have been shortchanged by Yadin's characterization.

Among other things, it declares:

Egypt and Israel "recognize a mutality of interest in good neighborly relations."

The two countries will "foster mutual understanding and tolerance and will . . . abstain from hostile propaganda against each other."

The two countries agree that three Israeli airfields abandoned in the Sinai will be used only for civilian use.

Roads and highways will be opened between the two countries, and a new highway will be constructed between Egypt and Jordan near Eilat.

Normal telephone, telex and cable traffic will be resumed between the two countries - the first time this has happened except for brief periods after Egyptian President Anwar Sadat's historic visit her in November, 1977.

Normal shipping in the Suez Canal and the Gulf of Aqaba.

Israeli Foreign Ministry officials in recent weeks have alluded to many of these provisions, but they have never before been spelled out in detail for the public to study.