Israel's Supreme Court today rejected an appeal by Rabbi Meir Kahane, head of the extremist Jewish Defense League, to be released from a three-month administrative detention imposed in connection with an alleged terrorist plot against West Bank Arabs.

Justice Itzhak Kahan, in rejecting the appeal, said the rabbi had been implicated in "a plot so serious [that the court] could not consider" reversing the detention order, issued by then defense minister Ezer Weizman May 13.

The justice did not mention details of the alleged plot, but Kahane's arrest coincided with the disclosure that police had uncovered a conspiracy by Jewish vigilantes to bomb the Al Aqsa mosque in Jerusalem's old city. The mosque it the third holiest shrine to followers of Islam, after Mecca and Medina in Saudi Arabia.

Before the arrest, the U.S.-born Kahane had told a news conference that the government should form a "Jewish terror group" to kill Arabs, and that if it did not, vigilantes would do it.

At his court appearance today, Kahane told reporters he was pleased with Monday's bomb attacks in the West Bank, in which Nablus Mayor Bassam Shaka lost both legs and Ramallah Mayor Karim Khalaf lost a foot.

"This week has been a holiday for me and all of Israel," said Kahane. "It seems good and talented Jews took revenge for the spilling of blood in Hebron," a reference to the May 2 Arab ambush attack in which six Jewish settlers were killed.

The arrest of Kahane and another ultranationalist, Baruch Ben Yosef, marked the first time that Jews were jailed without trial under an administrative detention law that has its origins in British emergency defense regulations of 1945.

Kahane's lawyers argued that his right to a trial under Israel law had been infringed. Kahane had also asked to be transferred to house arrest instead of being confined to the Shatta maximum security prison near Afula, because, he said, his life would be endangered by convicted Arab terrorists.

Under the emergency law, which was revised six months ago, Kahane can be held without trial for up to six months. Government sources said Kahane's detention is intended to disrupt the activities of his Israel-based movement, called Kach (thus).

Meanwhile, Bethlehem Mayor Elias Freij and Gaza Mayor Rashid Shawa, who resigned after Monday's terror bombings and then withdrew their letters of resignation yesterday, said they were disappointed that other West Bank mayors had failed to quit.

Freij, who earlier said he had "reached a dead end of isolation, subjugation and humiliation" under Israeli occupation, said he changed his mind because "I cannot be the only helmsman."

The reversal extricated the Israeli government from a dilemma. If Freij and Shawa had been joined by the mayors and municipal councils of other West Bank and Gaza Strip towns, the military occupation government would have faced the prospect of running and financially supporting 25 large Arab towns.

Under Jordanian civil law, which still is in effect in the West Bank, executive power is invested only in the mayor, and nobody else can sign municipal checks. Moreover, the Joint Palestine liberation Organization-Jordan Council in Amman, which allocates Arab states' finanical aid to towns in the occupied territories, would have cut off the funds if Israeli military authorities had taken over management of the towns.