In a ceremony laden with symbolism and historical significance, Egyptian Ambassador Saad Murtada today presented his diplomatic credentials to Israeli President Yitzhak Navon, becoming the first Arab envoy to Israel since the founding of the Jewish state 31 years ago.

In a parallel ceremony in Cario, Eliahu Ben-Elissar became Israel's first ambassador to Egypt as about 200 leftist Egyptian lawyers burned Israeli flags and hoisted the Palestine Liberation Organization banner atop an office building two miles from Abdin Palace, where President Anwar Sadat received the new envoy.

Sadat said the exchange of ambassadors is a "living symbol" of the peace between the two former enemies and that Ben-Elissar is "the right man at the right time and in the right place."

Just a month short of a year after Israel and Egypt signed the Camp David peace treaty in the White House, Murtada stood before the blue-and-white Star of David, Israel's national emblem against which Egypt has fought four major wars, and declared in a firm voice:

"I have been granted by President Mohammed Anwar Sadat, the honor of being chosen as Egypt's first ambassador to Israel, and I am pleased to submit to your excellency my letter of credence as ambassador extraordinary and plenipotentiary of the Arab Republic of Egypt to the state of Israel."

The moment's historical significance was not diminished by the simplicity and brevity of the ceremony in the grand foyer of the president's official residence here. A military band played the Egyptian and Israeli national anthems and Murtada and Navon read tributes to peace that just 27 months ago would have seemed beyond comprehension.

"The paths of our two people have, in the course of time, converged and separated," Murtada said, "Sometimes we have met in friendship, and sometimes in confrontation and struggle. It is our good fortune that today we are witnesses to the victory of the desire for peace."

There were no such exultations in the occupied West Bank and Gaza Strip, however. There Palestinian leaders proclaimed a "national black day" and conducted a general strike to protest the normalization of relations between Egypt and Israel.

Virtually all shops in the West Bank were shuttered and schools were closed, as Israeli security forces stepped up their presence to prevent disturbances. The strike in Gaza were less effective, but the municipal council called the exchange of envoys "a stab in the back of the continuous palestinian struggle."

The Arabic newspaper, Al Shah, said in an editiorial, "The flag which is about to be raised in Tel Aviv today is not that of the Egypt we know, and those diplomats who have lost all sense of shame do not represent the great Egyptian people we know."

The moslesm quarter of Beirut was shut down by a two-hour protest strike, and in Damascus all traffic stoped for five minutes at noon in a symbolic rejection of the treaty, according to radio broadcasts from Lebanon and Syria.

Syrian state radio said, "This is a day of overwhelming disgrace," and Lebanese Prime Minister Selim Hoss, in a press release, said it was "a sad day for all Arabs" when an Arab country granted recognition to Israel while "Israel's attacks on south Lebanon continue, its occupation of Arab land persists and the Palestinian people remain destitute."

In the Cario demonstration, Egyptian police arrested dozens of protesting lawyers after they chanted, "Tell the dogs of Zionism that we remain loyal to our Arab Kinsmen." Police also broke up an attempted protest at the tomb of the unknown soldier and the tomb of the late president, Gamal Abdel Nasser.

Ben-Elissar, 53, laid a wreath at the unknown soldier monument, where authorities had stepped up security.

Murtada, in his speech, made on oblique reference to the moribound negotiations on West Bank-Gaza autonomy, which resume today in The Hague with a meeting among special U.S. envoy Sol Linowitz, Egyptian Premier Mustapha Khalil and Israeli Interior Minister Yosef Burg. The peace treaty, Murtada said, restores "first and foremost the right of Palestinian people to a free and secure life."

Navon noted the treaty was not intended as a separate peace, but as a "prelude" to agreements with other Arab states. "Today this may seem difficult to achieve, but many things that seemed impossible yesterday are now natural and self-evident," he said.

One of Murtada's first diplomatic challenges could be to persuade the Israelis that the Egyptian-U.S. arms agreement announced in Washington yesterday, in which Egypt will purchase F16 fighter aircraft and 250 advance-design tanks, is not a threat to the balance of power to the region.

Israeli officials, voicing concern about the "quality and quantity" of the arms promised to Egypt, said they will launch a public opinion champaign in the United States to persaude the Carter administration to slow its pace of arming Egypt.