Guerrillas battling Morocco's King Hassan for control of the Western Sahara have taken their war well inside Moroccan territory and claimed a major victory there over a 7,000-man force, according to reports from the scene.

Moroccan officials yesterday acknowledged fighting in that area, but said the battle was still going on and that the Moroccan Army was forcing the guerrillas to retreat to their base in neighboring Algeria.

The conflicting accounts aside, the battle seemed to import new urgency to Morocco's request for U.S. arms to counter the guerrillas, who reportedly are now being armed with sophisticated Soviet-made weaponry.

Administration officials said Washington is going ahead with the sale of counterinsurgency equipment, including about six OV10 Bronco armed reconnaissance planes, an unspecified number of Cobra helicopters equipped with TOW antitank missiles and other material such as armored personnel carriers and trucks.

The controversial sale, which some congressional critics have said risks linking the United States with an unjust and losing war and alienating African states, was given the green light last month when Congress did not act to block it within a 30-day period. However, the U.S. weaponry has yet to be delivered.

Guerrillas of the Polisario Front, which is battling to turn the sparsely populated but mineral-rich Western Sahara into an independent state, said their units killed or wounded 2,000 Moroccan troops in a March 1 to 11 battle a couple of hundred miles south of Marrakech.

A group of Western journalists who toured the scene of the battle with Polisario guerrillas reported that they saw the charred remains of a Moroccan armored column littering a 75-mile stretch of territory along Morocco's Ouarkziz mountains. They said dozens of burned bodies of Moroccan soldiers and wrecked or abandoned equipment were scattered over the area.

If accurate, the number of casualties that the Polisario guerrillas claim to have inflicted would make the battle the most costly for the Moroccans since the guerrilla war began shortly after Spain ceded the 105,000-square-mile Western Sahara to Morocco and Mauritania in 1975.

A Moroccan officer allegedly captured by the Polisario told reporters that the armored force, sent to the area to mop up guerrillas, disintegrated after it came under unexpectedly heavy attack and young soldiers of a hastily trained unit fled.

In Washington, Moroccan Ambassador Ali Bengelloun said the casualty toll claimed by the Polisario was highly exaggerated and that the guerrillas themselves suffered heavy losses of men and equipment. He said the guerrillas were retreating to a haven at Tindouf across the Algerian border.

Independent diplomatic sources said it appeared that the Moroccans had, in fact, been defeated in the major battle, but they could not confirm any casualty figures. They said the clash marked a serious setback for Morocco, but that the Polisario did not yet appear able to take complete control of the territory.

"The Polisario is not in a position to win the war in the sense that they cannot controll the cities," one diplomat said. "But the guerrillas can go on indefinitely fighting in the desert."

At stake in the conflict is a barren stretch of rock and sand that is believed to contain valuable deposits of uranium, oil-shale and phosphates. The Polisario Front claims to represent the 80,000 inhabitants of the Western Sahara. Morocco insists that the territory rightfully belongs to it and has refused to negotiate with the Polisario.