An international team of archeologists completed this season's controversial excavations of the ruins of ancient Jerusalem today, but its leader vowed to return next year despite violent opposition by ultra-Orthodox Jews and a direct challenge to the government of Prime Minister Menachem Begin.

Yigael Shiloh, leader of the Ancient City of David excavations outside the walled Old City, said that eight weeks of digging had produced "not a shred" of evidence that the site was a medieval Jewish burial ground, as claimed by Israel's chief Rabbinical Council.

Prodded by members of the extremist Neturei Karta Hasidic sect, the Rabbinical Council had issued a ban on the excavations, but the ban was overturned both by Israel's Supreme Court and an opinion issued this week by the country's attorney general, Yitzhak Zamir.

"In all the excavations in this area in the last 60 or 70 years, there has been no reason to think that below the Canaanite and Israelite cities there were tombs," Shiloh said during a tour of the site today. "We didn't need all this circus," he added.

He was referring to a series of demonstrations last month in which hundreds of Orthodox Jews battled with police at the site and in the Hasidic Mea Shearim quarter of Jerusalem, resulting in dozens of arrests and injuries.

Shiloh said that if the archeological project, sponsored by the Hebrew University and several private foundations, receives adequate funding, the City of David dig will continue for several years.

The project already has been funded for next year, and Shiloh has begun seeking volunteers to scrape away tons of earth and rubble from the 18-acre site on a steep hillside overlooking the Arab village of Silwan. But Rabbi Moshe Hirsch of Neturei Karta said that if a government permit is issued to Shiloh next year, ultra-Orthodox Jews will return to the site and attempt to prevent excavations.

The controversy goes far beyond the principles of archeology and Orthodox observance, and has broad implications that bear directly on the delicate balance of power in Israel between secular and religious elements. As opposition Labor Party parliamentary whip Yosi Saris put it, "This has nothing to do with archeology. It's politics."

The June 30 national election, in which Begin's Likud coalition was returned to power with a thin three-vote majority, was accompanied by an important shift in alignment in which conservative and Orthodox factions of the religious parties gained in strength.

In order to form his government, Begin was forced to sign a voluminous coalition agreement in which the Orthodox Agudat Yisrael party made specific demands concerning observance of Orthodox law. One clause stipulated that if archeologists find evidence of Jewish burials, work should stop immediately and the matter referred to the Rabbinical Council.

While Shiloh insists that no bones have been found, the chief Ashkenazic rabbi, Shlomo Goren, seized on the City of David issue, saying he had visited the site at night and found old bones. Education Minister Zevulun Hammer, a member of the National Religious Party, took up the cause under pressure from the Rabbinical Council, suspending excavations on Sept. 1 for two weeks.

The Supreme Court, and later the attorney general, overruled the suspension, declaring, "In our state, which is not a theocratic state, . . . the rulings of the chief rabbinate do not in any way obligate state officials in their official capacities."

The ruling was a victory for secularism and a setback for the Orthodox religious parties, some of whose members have begun to wonder if the dozens of coalition agreements they forced Begin to sign will be whittled away one at a time by civil court decisions.

Today, however, the Rabbinical Council met in an emergency session and declared in a communique that "in Israel, religious law supercedes secular law. The Halakha Orthodox law is eternal, while secular law is temporary, and made by man." The council said at the next session of the Knesset, the Israeli parliament, it would demand adoption of a law requiring archeologists to stop digging when they find bones and let the Rabbinical Council determine the next move.

Shiloh disputed that contention, saying, "the Supreme Court determined there is no connection between the department of antiquities and the rabbinate. If out of these clashes we come with a clear opinion, it will have been worth the trouble."

"What would happen if every excavation in Israel were stopped because of this coalition agreement? There's nothing in the law that says if you find bones you can't dig. You don't have to be afraid of it. You just move them in a proper way, make note of it and continue," Shiloh said. He added, "We're not looking for provocations or interference. I'm a trained archeologist, not a politician."

While archeology long has been a national pastime in Israel, where amateurs always can be found digging for traces of the past, it has always been inseparable from politics, because many finds have been used to justify historical territorial claims. But Shiloh said such considerations have been secondary to the pursuit of knowledge, and that opponents of the City of David dig could set archeology back years.

Shiloh said that in spite of interruptions stemming from the religious conflict, his 120 volunteers made important finds this season, including ruins of the fortifications of the patriarchial period (18th century B.C.) and remains of the Jebusite-Canaanite city conquered by David in 1000 B.C. Also found was pottery from the Bronze and Iron ages and the Hellenistic period, as well as potsherds with Hebrew inscriptions.