Israeli ground forces supported by artillery swept into southern Lebanon early this morning and attacked two villages suspected as Palestinian guerrilla bases, the military command said.

The attacks came hours after a terrorist bomb injured 21 Israelis in an open air Jerusalem market. The Palestine Liberation Organization said in Beirut that one of its underground units in Israel was responsible.

The Israeli army said today its forces advanced past the Litani River in Lebanon, 15 miles north of the frontier to hit the villages of Arnoun and El Ayishiya. It was their deepest penetration of Lebanese territory.

Military spokesmen refused to comment on whether the Israeli force remained in Lebanon, whether it clashed with guerrillas or whether there were supporting air strikes. They said one Israeli soldier was injured in the attack, but there were no reports of civilian injuries.

In another Middle East development, Syrian Information Minister Ahmed Iskander Ahmed said in Damascus that his country and Iraq have agreed in principle to merge and that a constitutional formula is being prepared.

Ahmed's statement in an interview with Reuter confirmed reports that the long-time adversaries were attempting to get together. However, most observers were skeptical given the violence of clashes in the recent past between the Syrian and Iraqi factions of the Baath socialist party ruling in the neighboring states.

Also in Damascus, the Palestinians' parliament-in-exile approved a political program prohibiting any sort of participation in the U.S.-sponsored plan for peace between Israel and Egypt.

U.S. mediator Arthur Atherton was across town in Jerusalem offering new suggestions to Israeli officials when the bomb blast occurred yesterday.

In Washington, a U.S. official said the United States will register its regret over Israel's decision to build three new settlements in the occupied territories -- an action inflaming one of the main differences with Egypt in the peace talks.