The Kurdish region of western Iran teetered on the brink of a full scale insurrection today while threats from the country's Arab minority threatened to open up a southern front for beleaguered government forces in Iran's main oil-producing province.

Government forces in Kurdistan retreated to defensive positions on the outskirts of the town of Saqqez, which was reported under the control of Kurdish insurgents after heavy fighting with government forces and many casualties on both sides.

Meanwhile, a contingent of Revolutionary Guards -- an elite government force loyal to the unofficial head of state, Ayatollah Ruhollah Khomeini -- was sent to protect Iran's main oil export terminal at Kharg Island in the Persian Gulf because of labor unrest and threats of renewed violence by autonomy-seeking Iranian Arabs.

The Iranian Arabs, who claim to make up the majority of the population in the oil-rich Khuzestan Province in southwestern Iran, warned they would "react strongly" if the government did not hand back an Arab religious leader reportedly being held under house arrest in the holy city of Qom.

In Kurdistan, government forces used helicopter gunships, artillery and heavy machine guns to attack rebel positions in a sharp escalation of the fighting, which raged around a government garrison on the edge of Saqqez.

Saqqez, a predominantly Kurdish town of about 40,000 people, occupies an important position on the road between the Kurdish cities of Mahabad and Sanandaj and is about 50 miles from the Iraqi border.

There were conflicting casualty figures for the latest fighting.

The official Pars News Agency said the commander of the 28th Infantry Division based at Sanandaj and 22 government troops were killed in a clash as they were moving to reinforce Saqqez.

The rebels claimed they killed 80 government troops, but Iranian authorities denied this.

A statement from the 28th Division said 15 "counterrevolutionary agents' had been killed. Kurdish sources confirmed their casualty toll today was 15 dead and 70 wounded.

As the fighting around Saqqez intensified, the Kurdish spiritual leader, Sheik Ezzedin Hosseini, moved from his stronghold at Mahabad into a redoubt in the surrounding mountains and appealed to "the masses of Iran" to join the Kurds' fight. The statement is tantamount to a call for civil war.

The outlawed Kurdistan Democratic Party announced it had taken 311 Revolutionary Guards hostage and would execute one for each Kurd shot by an Islamic firing squad. The Revolutionary Guard commander in Tehran vehemently denied that any hostages had been taken.

The party said that Iraqi guerrilla leader, Massoud Barzani, the son of the late Kurdish leader Mullah Mustafa Barzani, had joined the Iranian Kurds with 3,000 of his best fighters.

Meanwhile, five more Kurds were executed by Islamic courts in the region, bringing to 33 the number of tribesmen sent before firing squads since the latest fighting erupted last week.

Kurdish leader Hosseini seemed to have ruled out chance for negotiation in his statement issued in Mahabad. It called for a national front of Kurds and democratic political groups, which have been forced underground recently because of their opposition of restrictions on freedom by the revolutionary authorities.

"It is completely clear that the government is moving toward a new dictatorship," the statement said. "We say again to the masses of Iran that the Kurdish people will fight for their basic rights in a united Iran and will not stop the fight even for a moment."

"City people, peasants workers, tribesmen, intellectuals and progressive clergy: Unite in a single group and prevent attacks on Kurdistan, its destruction and the massacre of the Kurds," Hosseini's statement said.

The sheik's move into a mountain hideaway followed a call for his arrest by Khomeini, who accused Hosseini of being "corrupt."

However, Hosseini's support among the Kurds was evident even in the provincial capital of Sanandaj, which correspondents said was totally in the hands of government forces with no signs of trouble.

The governor general of Kurdistan, Rashid Shakiba, said the Kurds were holding the towns of Mahabad, Bukan and Baneh in addition to Saggez.

The Kurds said they had captured two 106mm recoiless rifles and Army vehicles today and claimed to have turned back an advance toward Mohbad by 19 tanks yesterday.

In Khuzestan, 86 Revolutionary Guards were flown from the southern port of Bushehr to guard Iran's main oil export installation of Kharg Island in the Persian Gulf, Pars News Agency said.

The agency gave no reason for the new boost in security, but announced in a later bulletin that Arabs in Khuzestan had issued an ultimatum for the release by Saturday of their spiritual leader, Ayatollah Taher Shabeir Khagani.

Khagani was whisked away from his home in the southern port of Khorramshahr in July and taken into custody in Qom to silence autonomy-seeking Arabs in the port and the nearby oil refinery city of Abadan. An incipient rebellion by the Arabs was vigourously put down in May, but there has been sporadic violence since, especially in the form of sabotage against oil installations.

The executions of several Arab Iranians on sabotage charges last month seemed to stem the attacks on vital oil facilities. But observers said Arab militants might now feel in a stronger position to confront Khomeini's shaky government since most of the country's security forces are preoccupied with the Kurds.

The move to bolster security at the Kharg Island export terminal also followed reports of labor unrest. The provincial governor, Rear Arm. Ahmad Madani, said this week that disputes between leftist and pro-Khomeini workers had caused a slowdown in export operations at the terminal.