Egypt denounced today an Israeli cabinet decision to expand seven West Bank settlements as a "continuing obstruction to the establishment of a just and lasting peace in the Middle East."

The Egyptian protest, in the form of a Foreign Ministry statement, coincided with the opening in Alexandria of another three-day round of talks amoung Israeli, Egyptian and U.S. officials on setting up Palestinian autonomy in Gaza and the West Bank where the Jewish settlements are located.

Despite evident Egyptian displeasure at this embarrassing juxtaposition, there was no indication that yesterday's settlement decision would sidetrack the automony talks. Observers saw an effort to keep the complaint low-key in the fact that the government chose to make its protest through an anonymous ministry statement rather than through Prime Minister Mustafa Khalil as it has in the past.

In addition, Khalil's government was set to play host to one of the most vocal proponents of Jewish settlement on the West Bank, Israeli Agriculture Minister Ariel Sharon. Sharon, who commanded the Israeli tank thrust west of the Suez Canal during the 1973 war, was scheduled to begin a four-day visit on Tuesday.He is to see President Anwar Sadat and tour land-reclamation projects in Egypt.

He is to be followed next weekend by Israeli Defense Minister Ezer Weizman, who will stay five days to hold talks with his Egyptian counterpart, Gen. Kamal Hassan Ali. He will also visit upper Egyptian tourist attractions at Luxor and Aswan.