The eight-point Saudi plan for a settlement of the Middle East conflict has become embroiled in a controversy over one key word that is, in part, simply the result of the Saudi translation of it from Arabic into English.

It is the same kind of quarrel that arose over U.N. Resolution 242 adopted after the Arab-Israeli war of 1967, one in which the sense of a single word meant all the difference in the world to diplomats of adversary nations.

In the Saudi plan, presented in August by Crown Prince Fahd, the debate is over the meaning of a word in point seven that has been widely interpreted as implicitly offering Arab recognition of Israel in return for an Israeli withdrawal from all the Arab territories it conquered in the 1967 war, including East Jerusalem.

The question, however, is whether the Saudis in point seven are talking about the right of "peoples" or the right of "states" in the region to live in peace and whether they mean by states all of them, including Israel.

If they do indeed mean "states," it constitutes the first even implicit Saudi recognition of Israel in a formal plan of negotiations and is a major breakthrough in efforts to get Arab countries, other than Egypt, to recognize the existence of the Jewish state.

This is not only a hot issue between Israel and the Arab nations but even among the Arabs, that may well be the main sticking point to the acceptance of the Fahd plan at the forthcoming Arab summit in Morocco.

Use of the term "people" or "peoples" of the region would not imply recognition of the state of Israel in any way, and the Israelis have said this is the word used in the Fahd plan and not "state" or "states."

If the Israelis are basing their argument on the official Saudi translation into English of the text of the Fahd plan, they would appear to be correct.

The English translation of the eight points and of Prince Fahd's speech on Aug. 8 presenting the plan -- both of which were included in a government press kit handed out to correspondents covering a summit of six Persian Gulf states here earlier this week -- used the word "people" and not "state."

Point seven in English reads: "The right of the people of the region to live in peace."

But the original Arabic text handed out to Arab correspondents, reads: "guarantee or assurance of the right of states of the region to live in peace."

Whether the Saudis translated point seven into English in this manner by mishap or calculation remains a mystery. In Arabic, the two words shaab, meaning people, and daula, meaning state or country, are not even vaguely similar or normally subject to mistranslation.

Furthermore, they are translated elsewhere in the text correctly.

A single word in Resolution 242 was similarly fought over by Israel and the Arab states in the United Nations in September 1967.

That controversial word was "the" and whether it was included in the text depended upon the English or French translation of a sentence demanding that Israel withdraw from "territories," or "the territories" occupied in the war. The addition of the "the" implies "all" occupied territories; the absence of the "the" could be interpreted as implying something less than all.

The issue was finally settled by the Arabs interpreting the French version to say "the territories" and the Israelis accepting the English, which just said "territories."

Just how the Arabs will come out on the Fahd plan at their summit in Fez, Morocco, later this month is not yet known and clearly a momentous issue for them. If they insist on changing the Arabic word from "states" to "people," then the Saudi plan has little chance of gaining Western, particularly American, interest.

But if they agree to the word "states," even without "all states," it constitutes a significant change in the Arab position, particularly that of the Palestine Liberation Organization, and could well attract the kind of international support the Israelis are deeply concerned it is already getting.

The plan might then indeed have a chance of becoming what Prince Fahd said on Aug. 8 he hoped it would be, namely "an alternative solution so balanced and reasonable as to make those who are enamored of Camp David realize that there could be another peace framework radically different from Camp David and worthy of attention, meditation and perusal."