Jordan has quickly rejected an Israeli plan to build a canal from the Mediterranean to the Dead Sea through the Israeli-occupied Gaza Strip and is proposing an alternative that would bring water across Jordan from the Red Sea to the south.

With Egypt also coming out this week against the Israeli canal project, the stage is now set for a complex political battle over what is otherwise a challenging technical project that all the disputing parties agree is in their common interest in the long run.

The expectation here is that the United states, already involved in making peace between Israel and its Arab neighbors, may also be drawn as a mediator into the canal controversy.

The Israeli plan, approved in principle by Prime Minister Mechachem Begin's Cabinet last Sunday, calls for the construction of a 61-mile, $700 million canal starting from a point just north of Khan Yunis in the Gaza Strip across the Negev Desert to Beersheba and on the Dead Sea.

The Israeli-proposed canal would take advantage of a 1,300-foot drop in altitude between the Mediterranean and the Dead Sea to produce as much as 600 megawatts of hydroelectric power.

The water would also replenish the Dead Sea, which has been gradually shrinking and will dry up completely one day if the present situation continues.

Jordanian Industry Minister Ali Ensour said here earlier this week that the Israeli canal runs counter to accepted international conventions, because it would affect the size and chemical nature of the Dead Sea, adversely affect Jordanian industrial and tourism projects and pass through Israeli-occupied territory in the Gaza Strip. The latter, he said, transcends the accepted authority of an occupying power.

The Israeli technical committee studied 10 possible routes for the canal before the Cabinet chose the one starting in the Gaza Strip, passing through southern Israel to enter the Dead Sea near Ein Bokek. There, a four-turbine power plant would be switched on for four or five hours a day to help meet peak electricity demand in Israel in the 1990s.

The project would require 10 years to become operational.

Since Jordan objects to the Israeli plans, it commissioned its own studies on a similar, but more coplex, canal project that would replenish the Dead Sea by bringing in water from the Red Sea, 112 miles to the south. American consultants studied the project last year and concluded that the optimum development would be a combined pipeline and open-canal system, bringing about 850 million cubic meters of water a year from Aqaba to the southern end of the Dead Sea.

The water would have to be pumped up the Wadi Araba Desert to an elevation of more than 630 feet above sea level. From there it would flow by gravity down the 1,800-foot drop to the Dead Sea. En route, it would pass through four hydroelectric power plants with an installed capacity of 334 megawatts. At 1979 prices, the projected cost is $600 million or $100 million less than the Israeli canal.

Whatever the political controversies surrounding it, the Dead Sea badly needs an injection of sea water -- no matter where it comes from or who delivers it. Contrary to its name, the Dead Sea is neither dead nor a sea. It is a fully landlocked lake, with no outlet to the sea.But it refuses to lie still, rising and ebbing with the times.

According to a recent study by the United States Gelogical Survey, the Dead Sea reached a low point in 1818 when the water level dropped to 1,310 feet below sea level.

In the next 78 years, the water level inched up to a high of 1,275 feet below sea level in 1896. But it has been downhill ever since.

Last year, at he end of a five-year drought, the water level dropped to 1,315 feet below sea level. Then, the sea woke up and rose by an astonishing 3.9 feet last year, following the heaviest rains in a century.

The long-term trend, however, is for the Dead Sea to keep shrinking, largely due to the diversions of the Jordan River and its tributaries by both Israel and Jordan, which use its waters for irrigation and domestic needs.

The Jordan's inflow of about 700 million cubic meters of water a year had kept the Dead Sea's water level relatively steady until the mid-1960s when diversions and dam projects deprived the biblical water body of its main source of replenishment.

Evaporation has also taken its toll since, and the sea is gradually drying up. In another 1,000 years or so, it will disappear if present trends continue.

In fact, the sea has already split into a large northern basin, more than 1,200 feet deep, and a small southern basin of only about 9 feet in depth. If political boundaries did not exist, one could probably cross the Dead Sea on foot, though walking in mud, at its narrowest point across the Lisan Peninsula in the south.

It is on both sides of this peninsula that Jordan and Israel are extracting potash from the mineral-rich brine of the Dead Sea, which has five times the salinity of ordinary sea water.

The Israeli committee recommending the go-ahead for the Mediterranean-Dead Sea canal warned that mixing the two different waters would reduce the salinity of the Dead Sea and therefore decrease potash production by about 15 percent a year.

Jordanian officials heading the potash project, which is still being built along the eastern shore, appear less worried. They say that inflowing sea water, whether Mediterranean or Red Sea in origin, would be lighter than Dead Sea brine, and would form a large layer on top of it.

All that would be required to maintain optimum potash production would be to lower the brine intake a few yards to collect only the thicker brine. Already, the Jordanians say, they are drawing brine from 30 feet under the water and their projects would not suffer from inflowing sea water.

The main objection here is that Israel has no right to unilaterally alter the chemical nature of the Dead Sea.

The United States Geological Survey study agrees with the Jordanian assessment. It says an inflow of 700 cubic meters -- the Jordan River's former normal inflow -- is half of 1 percent of the Dead Sea's volume, and that "changes in chemical and physical characteristics of the Dead Sea water would therefore be minimal for the foreseeable future."