Israelis are telling the story these days of the man who murdered his parents and then at his trial pleaded for mercy on grounds that he had become an orphan.

It is an old Jewish joke, they say, revived now to depict the conduct of Ambassador Andrew Young following his meeting with an official of the Palestine Liberation Organization.

Young's effort to head off the controversy that news of his meeting was about to generate by going straight to the Israelis was viewed here as futile and beside the point. In the Israeli view, the harm already had been done once he saw a PLO representative and the controversy already had exploded, even if Israel did publicize it.

Israel's single-minded determination to meet the PLO out of Middle East peace negotiations was by then eclipsing other considerations. Once word of the meeting was received in Jerusalem, Israeli officials explain, Young was caught in a clash between Washington and Jerusalem whose importance surpassed the fate of any one man, including Young.

The PLO issue "is a very touchy point," a Foreign Ministry official said. "We had to do it, unfortunately for Young. But nobody thought anything in particular about Young as a person. The fact is that he acted as U.S. ambassador to the United Nations."

For that reason, Young was ignored when on Aug. 13 he went to Yehuda Blum, the Israeli ambassador to the United Nations, to lay out the story and ask for restraint and discretionl Israeli sources say Blum did not even report back fully on Young's entreaties and that they were not a factor in the decision to lodge a strong protest with Washington.

What Blum did report, they add, was Yourn's admission of the official nature of his July 26 meeting with PLO representative Zehdi Labib Terzi, contradicting earlier assurances from the State Department that the meeting was informal and unintentional.

Shortly thereafter, Secretary of State Cyrus Vance telephoned Israeli Ambassador Ephraim Evron in Washington to apologize for the inaccurate version relayed to Evron one day earlier by William Maynes, assistant secretary of state for international organization affairs, the sources say.

When the conversation with Vance was relayed here and added to Blum's cable from New York, Foreign Minister Moshe Dayan consulted with Prime Minister Menachem Begin on Aug. 14 and the order for a protest went out.

News of the Young meeting with Terzi was greeted with particular concern because it reinforced Israeli fears that the United States was seeking a discreet way out of the commitment made by Henry Kissinger as secretary of state in 1975 never to recognize or negotiate with the PLO until it recognizes Israel and its right to exist.

Relations between Washington and Jerusalem were already strained over U.S. moves to introduce controversial topics into the talks on Palestinian autonomy, a dispute over U.N. observer forces in the Sinai and recent American criticism of Israeli raids in Lebanon.

In all these disagreements, Israeli and U.S. sources say, Begin's government apparently is convinced that a tough, uncompromising position stands the best chance of being effective in Washington.

There was no hestitation, therefore, over whether the protest could lead to Young's resignation or whether that could produce an adverse reaction against Israel in U.S. public opinion, Foreign Minstry officials say.

Israeli sources say that, on the contrary, there was some consideration within the government of even harsher protest measures. But, in part because of the time difference that caused Young's resignation announcement to break here in the middle of the night, these ideas were overtaken by the uproar in Washington before they were fully discussed.

Begin revealed yesterday that the discussions also included a proposal that the prime minister telephone President Carter to make clear that Israeli wrath was directed against the official PLO-U.S. contact and not Young personally. This was rejected out of a fear it could be interpreted as interference in U.S. affairs, he said.

Despite State Department denials, some officials in the Israeli Foreign Ministry and prime minister's office suspect Young was acting with approval from Washington and that his resignation was designed to conceal the fact that higher U.S. officials were involved.

No one really believed the first version of Young's meeting offered by State Department spokesmen and now no one really believes that Young would take it upon himself to meet with the PLO representative in violation of well-known U.S. policy at a particularly delicate moment, they say.

"I don't think we are so naive as to believe Young was acting on his own," one official said."If we had thought Young was acting on his own, then maybe we would not have made such a protest."

The suspicions are heightened by Young's statement in anewspaper interview Sunday that the State Department had a precise, accurate account of the meeting by July 30. If that is so, they ask, why did Maynes give Evron a false account on Aug. 12 and why was this false account on relayed for publication in the press?

No one here pretends to know for sure that his suspicions are well founded, or who the higher officials could be who supposedly worked with Young in his contact with the PLO. But Israelis in and outside the government point to acknowledged contacts between a PLO official and U.S. Ambassador Milton Wolf in Vienna, as proof that Young's initiative fit into an apparent shift in U.S. policy toward the Palestinians.

Dayan has warned publicly about this shift and attributed it to the Carter administration's desire to guarantee good relations with Saudi Arabia to ensure adequate oil supplies at reasonable prices.

Viewed in this light, a Foreign Ministry source said, Young's call on Blum represented little more than an attempt to save his job and "take away the State Department's responsibility."

Ministry spokesmen deny reports in the United States that Israeli intelligence monitored and leaked work of the July 26 gathering in New York.

"We were surprised," a ministry official said. "We checked with out offices that could have known something, and they didn't have any idea."