Egypt has cast a deliberate chill over its month-old diplomatic relations with Israel, apparently in retaliation for the hard-line stance of Menachem Begin's government on West Bank settlements and the status of Jerusalem.

The diplomatically correct but frosty reception that Israeli diplomats have received here appears aimed at serving notice on the Begin government that the quality of its relationship with Egypt will be linked to the progress of currently stalled negotiations concerning Palestinian autonomy in Israeli-occupied territories.

According to a policy reportedly written by Deputy Foreign Minister Butros Ghali, which is now circulating among senior Egyptian officials, normalizations with Israel, including cultural contacts, the pace of tourism and exchanges of journalists, will remain sluggish at best as long as the autonomy negotiations remain deadlocked. The goal of the Camp David accords was to reach an agreement on autonomy for the occupied territories by May 26.

Ghali and the Foreign Ministry, since the beginning, have taken a harder line than President Anwar Sadat and have advocated keeping Israel at a distance until it shows itself willing to make concessions on Palestinian autonomy. It is not clear whether the chill on affairs under the responsibility of the Foreign Ministry reflects the position of Sadat, who makes Egypt's major foreign policy decisions.

The Begin government has caused controversy by proposing Jewish settlement in the West Bank Arab city of Hebron, and the Israeli Cabinet voted two weeks ago to expropriate privately owned Arab land for Jewish settlements on the outskirts of East Jerusalem.

The diplomatic status of Jerusalem has been at issue since Israel seized East Jerusalem from Jordan during the 1967 Middle East war.

Begin has vowed never to allow Jerusalem to be divided again.

Although officials have avoided direct discussion of the diplomatic freeze, Ghali obliquely confirmed it in recent remarks to foreign correspondents in Cairo. He acknowledged that "the quality of normalization certainly will be affected" if there is no progress in the tripartite talks among Egypt, Israel and the United States by the May target date.

In a message to American negotiator Sol M. Linowitz and Israel's chief negotiator, interior Minister Yosef Burg, Egyptian Prime Minister Mustafa Khalil complained last week that Israel is solely responsible for blocking progress in the talks, which are due to resume in Alexandria later this week.

Meanwhile, the handful of Israeli diplomats who formally opened their first embassy in the Arab world here Feb. 18 have received such a cold shoulder that a visiting Israeli joked "They're almost hostages-at-large."

Although their movement has not been restricted, the five diplomats and 15 staff members of the Israeli Embassy have been accorded only the minimum of official cordiality that protocol requires.

In sharp contrast to the warm welcome he received from President Anwar Sadat when he presented his credential just three weeks ago, Ambassador Eliahu Ben-Elissar lately has been virtually frozen out of Cairo's usually busy diplomatic social circuit.

According to an Israeli official here, Ben-Elissar and his wife have attended only one dinner party given by an Egyptian, a businessman who represents Israel's state-owned El Al Airline. The airline, as a step in the normalization process, now operates two flights weekly between Tel Aviv and Cairo.

An American woman had to cancel a planned dinner for the Ben-Elissars when every prominent Egyptian she contacted rejected her invitation. At least some of the invitees apparently took their lead from Ghali's policy paper, which reportedly cautions Egyptians against nonofficial contracts with the Israeli diplomats.

Even Ben-Elissar's official activities, restricted so far to formal calls on other diplomats and protocol visits to Vice President Hosni Mubarak, Khalil and Ghali have gone largely unreported in Egyptian press.

This is an apparently deliberate slight that reportedly also stems from the policy paper. Ghali's paper, a set of guidlines that officials have been told to follow during the early stages of normalization, reportedly calls for minimum press coverage of the Israeli Embassy.

Israeli journalists who currently must work in Cairo with temporary visas and accreditation also have been affecting by the diplomatic freeze, according to Zeev Chaftz, director of the Israeli government press office, who is visiting Cairo. He said they have complained that Egyptian officials have refused to grant them interviews.

One exception, Chafetz said, was Amos Elon, a columnist for the Israeli newspaper Haaretz, who has been a consistent critic of the Begin government. Elon was granted a private a private interview with Sadat and flew in the president's jet as the personal guest of the president's wife, Jehan Sadat, then she attended the rededication of the Philae Temple near Aswan recently. t

In another apparently deliberate slight, Ghali invited a Begin critic, former Israeli Foreign Ministry Director Shlomo Avnieri, to call on him before he accepted Ben-Elissar's first Formal call.

Observers here interpret the Egyptian diplomatic chill as a carefully measured tactic designed to signal to the Begin government that the benefits of diplomatic relations will be withheld until Israel shows a more conciliatory attitude in regard to settlements, the status of Jerusalem and movement toward Palestinian autonomy.