The Israeli military government in the occupied West Bank is rapidly declaring thousands of acres of Arab-claimed property as public domain land for use in expanding existing Jewish civilian settlements.

Palestinian lawyers and human rights activists representing West Bank landowners today called the settlement expansion drive the "biggest Israeli land grab" since the 1967 war. They asserted that the acceleration of the takeover follows statements by President Reagan, who said Feb. 2 that the settlements are not illegal but that a "rush" to establish them would be "ill-advised."

Since the 1967 conquest of the West Bank by Israel, American governments have held that the settlements are illegal, a fact that Palestinian activists stressed today.

Israeli Deputy Defense Minister Mordechai Zippori tonight said that "nothing special has been done that hasn't been done for the last 13 years, and that Arab land claimants have the right of appeal.

"we are going according to a lawful procedure. . . Before this land is given to some settlements, we have to announce that this is public land and that we intend to take all the public land," Zippori said.

Even before the Reagan statement, the Israeli government began to speed up construction of 10 new settlements. Agriculture Minister Ariel Sharon, who is in charge of settlements, said then that in the time before the June 30 elections, "a lot may be accomplished in [the West Bank] and we will do all we can to reinforce Jewish settlement in the territories and to expand it."

Before that, Mattiyahu Drobles, head of the settlement division of the World Zionist Federation, which plans new outposts for the government, said, "In light of the current negotiations on the future of [the West Bank], it will now become necessary for us to conduct a race against time. During this period, everything will be determined by the facts we establish in these territories. . . ."

But Palestinians pointed to Reagan's statement.

"I think that he gave the Israelis the green light," East Jerusalem attorney Elias Khouri said in an interview. "The government knows it is going out, and it wants to create facts on the ground before the elections. They know that if a Labor government finds everything prepared, it will not cancel what has been done."

Khouri, who often defends Palestinian plaintiffs, said he has eight new land seizure cases pending, involving more than 10,000 acres of Arab-claimed land in the West Bank, and that dozens of Arab landowners have come to him in the last two weeks asking for legal help.

The West Bank military government last week declared 3,700 acres of land west of Nablus to be public domain land, 1,700 acres of which have been designated for an industrial center for the Ariel settlement. At the same time, nearly 2,000 acres near Tubas were declared state land, as well as 1,000 acres near the Beit El settlement and 1,750 acres near the Beit Givron and Meon outposts.

Khouri said an additional 3,750 acres near Jenin, 300 acres near the Gush Etzion settlement bloc and 100 acres near the Kiryat Arba high-rise settlement at Hebron have been earmarked for settlement expansion.

Military government officials said that the land in question was surveyed over the last several months and found to be without record of ownership, or with records that are so vague that they could not withstand the scrutiny of a court test. Such property is considered state land under Israeli law and the military governor, as acting sovereign in the West Bank, assumes title.

However, Khouri and other West Bank lawyers said that part of the problem is that much of the land not deeded to Arab owners falls into the category of miri land, meaning that its claimants have used it for grazing or cultivation for generations and, in many cases, have paid taxes to a succession of Turkish Ottoman, British and Jordanian authorities.

Khouri complained that military land committees formed to hear appeals on land cases place the burden of proof on the Arab claimants and require that within a 21-day appeal period the owners produce new survey maps.

"It takes months and months, and much more money than these people have, to get surveys done.But if they don't bring in survey maps in 21 days, the military committee dismisses the appeal and the land goes to the settlements," he said.

"It is not a legal question any more. It is a question of whether Palestinians will live in this area or not live in it. It's a political question," said Khouri, who has handled thousands of West Bank land expropiation cases in Israeli courts and who won the landmark Supreme Court decision against the Elon Moreh settlement.

Khouri said he will circulate an appeal in the Israeli Knesset, or parliament, asking members to intervene politically with pressure on Prime Minister Menachem Begin's Likud government, since, he said, the settlement expansion will be completed before he can obtain hearings in court on his appeals.

Ibrahim Matar, a Palestinian economist who has helped farmers with their cases, said Reagan's statement "reversed 13 years of official U.S. policy toward Israeli settlements," and disregarded the 4th Geneva Convention, which was signed by the United States in 1949 and which bars transfer of civilian population to occupied territory. Israel also signed the convention, but has maintained that it does not apply to the West Bank because since Jordan occupied the territory in 1948, its sovereign status has never been clarified.

Palestinian sources said they were also discouraged by statements by Labor Party leader Shimon Peres indicating that if Peres is elected prime minister, he will not dismantle settlements, and by what they called Egyptian President Anwar Sadat's "aloofness" to the settlement problem.