Britain has transmitted a new proposal to Argentina for ending the Falkland Islands conflict that includes a unilateral declaration by London of an end to hostilities in the South Atlantic, government sources said here today.

The proposal, transmitted to the Argentine Foreign Ministry through the Swiss Embassy, is meant to resolve a diplomatic impasse and allow Britain to return 590 military prisoners it is still holding.

Britain had said it would hold the prisoners until the Argentine government agreed to a formal end to hostilities in the conflict. But Argentina has refused to accept a cessation of hostilities unless Britain agrees to negotiations over Argentina's sovereignty claim to the islands.

In London, the Foreign Office denied that Britain had used the wording "unilateral cessation of hostilities," but said Britain had informed Argentina in three diplomatic notes that it considered hostilities to have ended. He said Britain is awaiting Argentina's response.

A Foreign Ministry spokesmen said today that there was no official comment on the British diplomatic message, reported by the morning newspaper Clarin. But a government source confirmed that the message was under study.

Although Argentine leaders are not expected to launch any new military action against British forces on the Falklands in the near future, officials have withheld a declaration of an end to hostilities as a way of pressuring Britain to comply with U.N. resolutions calling for negotiations.