Israli Prime Minister Menacheim Begin and his Cabinet today rejected Egyptian President Anwar Sadat's assertion yeaterday that Palestinians have an "eternal national and religious right" to Jerusalem.

Just four days before Begin and Sadat are scheduled to hold a summit conference in Ophira, on the eastern coast of the Sinai peninsula, the Cabinet adopted a resolution reiterating Israel's claim to soverignty over all of Jerusalem, including the eastern sector which it annexed after capturing it in the 1967 Six-Day War.

"Jerusalem is the eternal capital of Israel, one city indivisible.By law, freedom of access to the holy places is guaranteed to members of all religions and has been since the liberation and unification of Jerusalem," the Cabinet declared in a communique read by Begin afterward.

Sadat, in a letter to the League of Arab and Islamic Peoples, had proposed that May 30 be declared an "international day for Arab Jerusalem." The Egyptian president formed the organization after the Arab League moved its headquarters from Cairo to Tunis to protest the Egyptian-Israeli peace treaty.

May 30 coincides with the traditional day on the Moslem calender on which the Prophet Mohammed is believed to have made his night journey from Mecca to Jerusalem, from where he ascended to heaven on a horse.

"Jerusalem, therefore, is holy to Arabs and Moslems, and the Palestinian people have an eternal national and religious right to it," Sadat declared.

He added, "Jerusalem should be a symbol of peace and cooperation. It is unfair and unjust to have it tarnished by the occupation."

[United Press International reported later that Sadat suggested today to a group of Israeli legislators in Alexandria that Jerusalem be administered jointly by Arabs and Israelis.]

[Egyptian Information Minister Mansour Hassan told reporters Sadat had explained to the visiting Israelis Egypt's position, "which is that a solution of the Jerusalem problem should be satisfactory to the sentiments of Jews, Moslems and Christians. . . This can be done by keeping Jerusalem a unified city, run by a joint Arab-Israeli municipal council."]

It was not certain tonight whether Sadat intends to raise the Jerusalem issue when he and Begin meet Thursday. Begin said last Thursday that they intend to discuss the Syrian missile crises in Lebanon, normalization of relations and the withdrawl of Israeli forces from the last third of the Sinai by next April1.

However, Begin appeared to be reluctant to escalate the dispute over the status of East Jerulsaem. The terse Cabinet communique was adapted from a parliamentary bill passed last year to reiterate Israel's annexation of the eastern sector of the city, and the prime minister today uncharacteristically refused to elaborate on it when he met with reporters.

However, the right-wing Tehiya (Renaissance) faction of the Knesset (parliament), whose members opposed the peace treaty, called on Begin to cancel his summit meeting because of Sadat's statement. The party said in a statement that Begin should remain here and renegotiate the planned evacuation of the Sinai because Sadat indicated he will make an effort to force Isrel's evacuation for the Sinai.