Israel egypt and the United States agreed for continuing negotiations on elections to step up Palestinian self-rule in Gaza and on the West Bank of the Jordan River.

The accord, which came after two days of sometimes tense talks in this northern Israeli city, contained no substantial agreement on how to carry out the elections and amounted in effect to an agenda for more talks. It nevertheless was hailed as significant progress by U.S., Israeli and Egyptian chief negotiators, who announced their agreement at a joint news conference.

"there are always ups and downs," said the Israeli delegation chief, Interior Minister Josef Burg. "If there were more ups than downs, it means it was a good meeting."

The agreement was the first involving something more than procedure since the autonomy talks began about two months ago with a mandate to organise elections by next May for "full autonomy" for Palestinians in the West Bank and Gaza territories occupied by Israel since the 1967 Middle East war.

But no progress -- not even toward setting up an agenda -- was reported on the negotiators' effort to define powers and responsibilities of the self-rule, called for in the Camp David accords of last September and the Egyptian-Israeli peace treaty of last March.

The talks here centered instead on elections because all three sides felt this was where agreement was most likely. But setting out chapter headings for talks on the elections also forced Egyptians and Israelis to grapple, at least implicitly, with the definition of Palestinian autonomy, coference sources said.

Despite the "terms of reference" for more talks, a sharp disagreement between Israel and Egypt over U.N. Security Council Resolution 242 hung over the gathering.

The dispute, which provoked oblique warnings from the Israelis yesterday that they might reconsider participation in the talks, was muted today by Burg and the head of the Egyptian delegation, Prime Minister Mustafa Khalil.

The U.S. chief negotiator, Ambassador James Leonard, also attempted to play it down, saying moves under way at U.N. headquaters aimed at adding to the resolution fall outside the purview of the autonomy talks and should not be allowed to get in their way.

The Israeli Cabinet of Prime Minister Menachem Begin reportedly has told the Carter administration it would reconsider its treaty obligations to grant autonomy to the West Bank if the resoultion were amended significantly. An Israeli spokesman, Dan Pattir, said last night that the resolution is "the only basis on which negotiations can be conducted."

Despite the warnings, however, there was no air of crisis at the talks' final session today. A new round was scheduled in two weeks at Alexandria, Egypt, for preparatory working groups, and for the full negotiating teams in about a month, also in Alexandria.

According to the accord reached today, the negotiators will be discussing seven points "to provide for and ensure free elections, including peaceful assembly and expression and a secret ballot, toward establishing full autonomy to the inhabitants in accordance with the framework for peace in the Middle East . . ."

It was a measure of the difficulty of the negotiations that the text of the accord omitted mention of what territory the "inhabitants" inhabit. This reflected a dispute in terminology, with Israelis referring to the area of issue by its biblical names of Judea and Samaria and Arabs as the West Bank.

The quarrel over names underlines Israel's cliam to the area based on ancient Jewish history contained in the Bible, and the Arab claim to the same area based on its status since Ottoman days until Israel conquered it in the 1967 war.

Similarly close attention went into the seven terms of reference, and each is freighted with the fruit of long discussions, conference sources said.

They are:


Conduct and Limitations of compaigning, of political expression and of elections.

System of elections, that is, direct personal elections or by lists of candidates, constituency voting or proportional representation, or other possibilities, including a mixed system.

Eligibility to vote, including age, sex, residence nd disqualifying conditions.

Eligidility for candidacy.

Administration of free elections.

Supervision of elections.

Under each heading lies a thorny issue to be decided in the subsequent negotiations. Defining the constituences, for example, will force a decision on whether the 60,000 Palestinian residents of Jerusalem will vote, conference sources said.

Israel had annexed East Jerusalem since occupying it in 1967. It claims the status of the holy city is not negotiable, that it is the Israeli capital. Egypt maintains that Arab East Jerusalem, which has under Jordanian rule from 1948 until 1967, is part of the West Bank and thus should be part of the self-ruled Palestinian territory.

The sources said discussions on voting eligibility, particularly residence, will force consideration of whether to grant the vote to former West Bank and Gaza residents who have emigrated.

Discussion of these issues, they added, will force the negotiators to move toward substantial topics that will help define the nature of self-rule even if this is not part of the agenda.

Observers noted, however, that the terms of understanding implied no commitment by Egyptians or Israelis beyond the agreement to discuss the subjects. Disagreements on them thus remained as broad as before.