The heads of the Egyptian and Israeli negotiating teams agreed today that the May 26 target date for completion of talks on the proposed West Bank and Gaza Strip autonomy scheme should be regarded as a "positive incentive" but not a fixed deadline.

Meeting in their 10th attempt to get the moribund autonomy negotiations moving, the heads of the two delegations appeared to lay to rest the steadily growing controversy over the significance of May 26.

While Israel has regarded the target date as an artificial and arbitrary goal with no particular signficance, Egyptian officials including President Anwar Sadat and acting Minister of State for Foreign Affairs Butros Ghali have publicly said it is an inflexible deadline that must be met.

When asked about the date today in a press conference after the latest round of talks, the Israeli chief negotiator, Interior Minister Yosef Burg, said, "We took this date as a positive incentive to do our best to come to a conclusion and we discussed how to do it."

Egyptian Prime Minister Mustafa Khalil, Egypt's chief negotiator, quickly added, "I agree."

Special U.S. envoy Sol Linowitz added, "this has been a false issue for far too long. There has been a perception of a divergence of opinion over whether it is to be a goal deadline or target date."

Later, Linowitz said the teams had "agreed upon a plan of intensive negotiations" to follow meetings in Washington next month between President Carter and Sadat and Israeli Prime Minister Menachem Begin.

However, little else appeared to be accomplished in the last round of autonomy talks, as the officials said the thorny issues of Jewish settlements, voting rights of East Jerusalem Arabs and the possibility of implementing autonomy in the Gaza Strip before the West Bank were not discussed.

Becuase the current talks were, in part, co-opted by the upcoming Washington talks, the negotiators trimmed back their schedule from three days to one day and are scheduled to leave here Friday.

Linowitz plans to return immediately to Cairo, where he intends to meet again with Sadat before returning to Washington.

With many of the tangential issues of the elections already resolved, such as the mechanics of balloting and eligibility of voters in the West Bank, East Jerusalem has emerged as one of the three most difficult items still on the table.

Egypt has insisted that all of the territory captured by Israel in the 1967 Six-Day War be divided into election districts.

Israel has repeatedly rejected the districts proposal, saying that East Jerusalem is not occupied territory but is an integral part of an indivisible city.

Under a compromise proposal being considered, sources said, Egypt would droup the demand that East Jerusalem be drawn as an election district, and Israel would permit the Arab residents there to vote.

Inherent in the compromise, at least according to the Israel view, is the understanding that autonomy is applicable to people, and not to territory.

News services reported the following from Israel:

Arab guerrillas attacked four Israeli buses heading to pick up Arab workers in the occupied West Bank, but no one was hurt, a military spokesman said.

An Israeli officer who ordered an Arab prisoner killed during Israel's 1978 invasion of southern Lebanon has been pardoned and will be set free next month, according to a military spokesman. Maj. Arieh Sadeh served eight months of a sentence that was reduced from five years to 2 1/2 years by Israel's chief of staff, Lt. Gen. Raphael Eytan.

Jordan announced that King Hussein, who has been invited by President Carter to meet with him in Washington, would not be able to make the trip until at least May. Some observers have speculated that Hussein wants to keep his visit clearly separate from those of Sadat and Begin.