A demonstration by Arab students at Bir Zeit University in the occupied West Bank erupted into violence today as Israeli troops stormed the campus searching for youths suspected of throwing stones at soldiers.

The clash was the latest in a series of disturbances in the West Bank over the past several weeks and increased Palestinian militancy against Israeli occupation and the proposed limited self-rule envisioned in the Camp David peace accords.

Border police sealed off the village of Bir Zeit, north of Ramallah, preventing reporters and West Bank political leaders from reaching the university. But faculty members and students said in telephone interviews that troops used tear gas and fired authomatic rifles over the heads of students to disperse the crowd.

Then, according to several faculty members, the students barricaded themselves in classrooms for about two hours, until troops smashed windows and broke down doors to reach them.The soldiers fired through one grille-covered door to break the lock, one faculty member said.

Hannan Milchail, a Bir Zeit staff member, described the soldier's sweep through the campus as "extremely violent and vicious" and said students hid to avoid being beaten.

West Bank military command officials said tonight an investigation will be held to determine if regulations were violated and if Army troops had sought permission to enter the campus, as required. However, sources in the military governor's office said initial reports showed that a "reasonable" amount of force had been used in quelling the disturbance.

Seven students, including the campus president, Peter Khouri, were arrested, and six reportedly were injured. Bir Zeit officials said students and faculty members, including the dean of students, Munir Fasheh, were ordered at gunpoint to pick up stones littering the street in front of the campus.

The faculty members charged -- and Israeli authorities denied -- that troops beat students with riot sticks and then smashed automobile windshields in reprisal for the stone-throwing.

University Vice President Gabi Baramki ordered Bir Zeit closed for the Christmas holiday two days early, and troops withdrew from the village, officials said.

The clash began when several hundred students gathered at a mosque outside the campus to protest the arrest of six students during another demonstration on Thursday.

As speeches against Israeli settlement and the autonomy scheme were being made, two truckloads of soldiers arrived, and students began throwing stones at them, eyewitnsses said. The soldiers opened fire to drive the students back onto the campus.

Bir Zeit, long a center of radical Palestinian nationalism, was closed by the military governor last spring. Israeli authorities allowed it to reopen this fall when university offcials assured them they would control demonstrations on the campus. Baramki said, however, that he could not be held responsible for incidents outside the university grounds.