Embassy guards firing into the crowd. Angry demonstrators hurling stones. The screams of women being pushed around. Police storming the building on orders from the president. Banner headlines. Diplomatic relations broken.

It sounds like a major international crisis, but actually it was only a dispute between landlord and tenant that got out of hand.

A feud that has been simmering for years, matching Bulgarian heavyhandedness against Egyptian pride and stubbornness, finally boiled over -- with the result that Egypt tonight broke off diplomatic relations with Bulgaria. The move has displaced the peace negotiations with Israel as the talk of Cairo.

Meeting over cocktails tonight, diplomats from the Eastern European Communist countries, whose relations with Egypt are strained at best, expressed outrage and shock that the Egyptians had stormed the Bulgarian Embassy and arrested a guard.

Western diplomats said they found it difficult to believe that President Anwar Sadat, a man with other things on his mind, would intervene personally in an incident of this kind.

Their consensus was that Sadat loses nothing by getting rid of the Bulgarians, whom the Egyptians regard as pawns of the Soviets, and may gain some political points by coming to the defense of the Egyptian family.

Egyptian officials, journalists and witnesses gave this account of how Egypt and Bulgaria came to break diplomatic relations.

For nearly 30 years, Fuad Taher, a high official in the Power Ministry, has occupied the second floor of a three-story building in a choice location in the Zamalek diplomatic quarter. Some years ago, the Bulgarian government bought the building to use as an embassy, but Taher refused to move.

Egyptian law protects long-term tenants and controls their rents. The Bulgarians twice failed in attempts to evict the family through court action and then sought to buy them out. According to Ambassador Georgi Vladikov, Taher's family pays only $24 rent a month, not unusual under the complex real estate laws here, and spurned an offer from the Bulgarians of $257,000 to move out.

Taher went to Saudi Arabia on official business, leaving his wife and two daughters in the flat. The Bulgarians, according to the Egyptians, then resorted to strong-arm tactics and harassment.

Official Egyptian accounts say the Bulgarians closed off the main entrance to the building, prohibited tradesmen from going to the Taher apartment, shut off the water and blocked the staircase.

On Sunday, restraint apparently broke down on all sides. According to the Egyptians, passers-by in the neighborhood heard the screams of women being beaten and began stoning the embassy in protest. Security guards and other embassy personnel fired warning shots to disperse the crowd.

Taher's wife, Enaya, and daughters were taken to a hospital for treatment.

The government announced that it would conduct a survey of firearms in the possession of all foreign diplomatic missions. But the intensity and swiftness of Sadat's further reaction came as a surprise. Yesterday, acting on what the Egyptians say were the direct personal orders of Sadat, police and security forces surrounded the embassy and stormed in when the Bulgarians refused to admit them.

A Bulgarian security guard, who the Egyptians say has no diplomatic immunity, was arrested.

The Bulgarians responded by ordering the Egyptians to close their embassy in Sofia but stopped short ofbreaking relations.

Tonight, however, the Egyptian Foreign Ministry took the last step.

"Egypt sought to contain the incident within its normal limits," a Foreign Ministry announcement said, "but the government of Bulgaria chose to expel the Egyptian Embassy staff from Sofia and accordingly Egypt has decided to sever relations with Bulgaria." The Bulgarian embassy staff, the announcement said, "behaved in a way that affected the dignity and the rights of Egyptian citizens, which is a flagrant violation of international diplomacy."