The suddenly escalated border war between North and South Yemen matches a pro-Western ally of the United States and Saudi Arabia against the Arab world's only Marxist state -- one that has given the Soviet Union a strategic foothold on the tip of the Arabian Peninsula.

The conservative Saudi monarchy, just north of the two Yemens and the most powerful state in the region, is reported to be gravely concerned over the conflict. About a million North Yemenis work in the oil-fueled Saudi economy and the kingdom's strongly anticommunist rulers fear that South Yemen's Marxist regime could spread its authority into the Saudi-influenced North.

Diplomatic sources in Saudi Arabia said Saudi preoccupation with the increased fighting was a major factor in the decision this weekend by Crown Prince Fahd to call off his scheduled trip to the United States.

South Yemeni Foreign Minister Mohammed Saleh Motei conferred with Fahd in the Saudi capital of Riyadh on Saturday and was reported back for more conferences there today following a quick return Sunday to Aden. Mahmoud Riad, secretary general of the Arab League, also conferred with Motei in the Saudi capital and announced that both Yemens have accepted a mediation attempt by the League Council.

U.S. diplomatic sources in Washington said the border flareup also aroused concern here because of South Yemen's Marxist oritentation and military value to the Soviet Union. Aden's government controls the Bab al-Mandab Strait, the 15-mile-wide entrance to the Red Sea passage between the Suez Canal and the Indian Ocean.

In addition, the United States is particularly eager to demonstrate ability to respond to concerns of Saudi Arabia, its chief ally in the Persian Gulf since the revolution in Iran that was widely perceived as U.S. abandonment of Shah Mohammad Reza Pahlavi.

Deputy Assistant Secretary of State Morris Draper testified before a Congressional subcommittee today that the United States recently agreed to increase military sales to North Yemen by 12 F5E fighters, 100 armored personnel carriers 64 M60 tanks and the transfer of two C130 transport planes from Saudi Arabia.

This adds to $100 million in Saudifinanced sales already agreed in a program that includes the presence of U. S. military training teams within North Yemen.

State Department spokesman Hodding Carter said the United States is following the hostilities closely and has been in touch with the rulers of North Yemen and Saudi Arabia, but not South Yemen. There is no evidence, he added, that South Yemen's communist advisers have crossed the border into North Yemen.

The South Yemeni leader, Abdul Fatah Ismail, has steered the Aden government into close alignment with Moscow since taking over the country in a bloody coup last June. U.S. intelligence analysts say between 800 and 1,000 Soviets, between 500 and 700 Cubans and more than 100 East Germans act as military and economic advisers in the little country of 1.9 million inhabitants.

Some reports say Cuban pilots operate South Yemen's Soviet-supplied Mig21 fighters. But this has not been confirmed and Ismail has denied it.

A North Yemeni communique issued in Cairo today accused South Yemen of destroying several unidentified villages and towns in attacks that involved the Mig21s, as well as heavy artillery and ground-to-ground missiles. U.S. analysts said, however, that they have no indication the Migs are being used, pointing to the limited value of such supersonic aircraft in the small-scale war along the mountainous, ill-defined border separating North and South Yemen.

South Yemen's radio said its ground forces captured the town of Harib, five miles inside the border and 85 miles east of the North Yemeni capital of Sanaa, after tribal forces defending it switched loyalty during a battle Sunday.

Earlier South Yemeni broadcasts claime the capture of the North Yemeni towns of Mukayris, Qatabah and Al Beida since the clashes escalated late last week.

Border tension and occasional fighting have plagued relations between the two countries almost continually since Britain's colonial administration in Aden ended in 1967. There have been several signs since Ismail's coup last summer that the old rivalry would erupt into larger-scale fighting again once Ismail consolidated his hold.

Saudi Arabia has aided in equipping and training a force of anti-Marxist South Yemenis, estimated to number about 15,000. South Yemen, for its part, has been training and arming dissident North Yemenis. These efforts are complicated by traditional willingness by the mountain tribes on both sides to mount raids across the border in exchange for weapons.