Despite being trapped inside a ring of Israeli steel, Palestine Liberation Organization leader Yasser Arafat has managed to increase both his personal stature among Palestinian guerrilla groups and the PLO's political standing internationally.

In the view of senior Lebanese and foreign officials here, Israel's position has become so unfavorableduring the past few weeks that the militarily vanquished Arafat could well end up a political victor.

[The PLO and its Arab backers are holding out for at least a tacit form of American recognition in exchange for a PLO withdrawal from Beirut, Palestinian and Arab sources said Sunday.]

While the Israelis still could launch a major military operation to achieve their stated objective of destroying the PLO, they are no longer seen here to be in a position to win politically. Far from splitting the organization, the Israelis have caused the various, often feuding, Palestinian guerrilla groups in Beirut to rally behind Arafat.

As a consequence of the siege and the failure of the Arab states to come to the PLO's aid, the 52-year-old guerrilla leader now faces virtually no challenge from the leftist "Rejection Front" Palestinian groups and their Soviet-supported Arab allies. Rejection Front leaders, such as George Habash of the Popular Front for the Liberation of Palestine, publicly have declared their support for Arafat's leadership, come what may in the current crisis.

A similar sentiment is detectable among Palestinian guerrillas as Arafat, seemingly self-assured and confident, tours Palestinian neighborhoods and military positions with a small retinue of bodyguards.

Abroad, the PLO has been receiving increased attention and sympathy, with its envoys meeting the leaders of Britain and France and lobbying hard for direct contacts with Washington.

"Basically the PLO is more united than it has been in a long time," said a senior Western diplomat here. "And Arafat has never been so much the leader of the PLO as he is now. He has come out of this so far as the element that has kept things together."

According to this official, "the Israelis would have been a damn sight smarter if they had left a road open for the Palestinians to get out." He reasoned that many Palestinians with families here might have been tempted to evacuate them if the Israelis had not sealed off West Beirut from all sides with as many as 30,000 troops, at least 300 tanks, hundreds of armored vehicles and heavy guns and an armada of Navy gunboats.

"What the Israelis have done is forge a form of unity on the Palestinians," the diplomat said. "Even those who would have liked to leave are forced to stand and fight."

Lebanese and foreign observers see this and several other factors as contributing to an increasingly unfavorable Israeli military position.

They point out that despite repeated statements by Israeli leaders that the Army would not allow the conflict to degenerate into a war of attrition, that is precisely what has happened. While the latest cease-fire generally has held for the past week, sporadic sniping in Beirut's southern suburbs and guerrilla attacks behind Israeli lines in southern Lebanon reportedly have caused a number of casualties on both sides.

The Israelis also have shown signs of getting bogged down in the morass of Lebanese internal politics. The Israeli Army has been forced to intervene, for example, to keep peace between its Christian rightist allies of the Phalangist militia and rival Moslems of the Druze sect in Israeli-occupied areas. The Phalangists have been trying to extend their zone of control on the coattails of the Israelis, who also have an interest in courting Lebanese Druze and Shiite Moslems.

Confronted with mounting opposition to the war at home and abroad, Israel also faces the prospect of a huge domestic and international outcry if it tries to storm West Beirut. Meanwhile, the Army runs the risk of unprecedented morale problems as the debate over the war seeps through the ranks.

Such are the Israeli Army's problems that some observers feel the tables might be turning. If the present situation continues, they believe, the Israelis might be forced to cast around at some point for a face-saving formula to leave Lebanon.

"The Israelis are in a tight spot," a Lebanese Christian Cabinet minister said. "A political solution now signifies a victory for the PLO."

He said that with the United States trying to negotiate a political settlement and seemingly committed to preventing an Israeli attack on West Beirut, the PLO is in a good position to extract U.S. concessions that would advance its pursuit of a homeland. Even by leaving Beirut and Lebanon, the minister said, the PLO might be able to claim a "defensive victory"--remaining intact politically, having carried on a war with Israel longer than any Arab country and possibly gaining some kind of U.S. political compensation.

The minister and some Palestinian leaders suspect that, aware of these prospects, Israeli Defense Minister Ariel Sharon may be preparing a military strike that would deny the PLO any political triumph.

It is this fear, Lebanese observers say, that tempts the Palestinian leaders to withdraw and forgo the bigger but much riskier victory that would result if they managed to hold their ground.

As for the United States, one well-informed Lebanese observer said President Reagan may have more to gain politically than he realizes if he "saves Arafat's head." In this analyst's view, such a result would greatly boost pro-U.S. moderates in the Arab world--notably Egypt and Saudi Arabia--while leaving the Soviet Union and its allies out of the picture. Already, he said, there is a strong anti-Soviet mood among even some leftist Palestinian leaders about Moscow's negligible response to the crisis.

And, consciously or not, even hard-line Palestinian spokesmen have adopted the phrase that the late Egyptian president, Anwar Sadat, often used: as far as the Middle East is concerned, the United States holds nearly all the cards.