Israel bluntly rejected tonight a call for the deployment of United Nations cease-fire observers around Beirut and, in an apparent response to President Reagan's demand for an Israeli pullback, said the deployment of its forces in Beirut would be determined only after the trapped Palestinian guerrillas leave the city.

The Soviet Union called for an urgent Security Council meeting tonight to condemn Israel. Details on Page A23

During a five-hour special meeting conducted while more than 2,000 antiwar demonstrators stood outside the office of Prime Minister Menachem Begin, the Israeli Cabinet adopted a resolution saying the presence of cease-fire observers would signal to the Palestine Liberation Organization that it is "not obligated to leave Beirut and Lebanon" as Israel is demanding.

The statement, read to reporters by Cabinet Secretary Dan Meridor, made no direct reference to Reagan's call for a two-week total cease-fire to aid the negotiations for a PLO withdrawal and for a pullback by Israeli forces from positions they gained earlier this week inside the western sector of the besieged city.

But, strongly suggesting that Israel will not give up what it considers key new positions in the city, the Cabinet declared that "arrangements for the deployment of Israeli forces will be determined following the withdrawal of the PLO from Beirut and Lebanon," and on the basis of a "general rule" that all foreign forces should leave Lebanon.

Meridor refused to answer questions following the meeting, but there was nothing in the Cabinet statement to suggest that Israel is prepared to lower its demands despite growing U.S. pressure.

In its response to the U.N. Security Council resolution authorizing the placement of observers to monitor the much-shattered cease-fire, the Cabinet declared that "all violations" of previous cease-fires had been by the PLO.

Without mutual agreement to obey the cease-fire, the statement said, "Israel's response to violations is inevitable. United Nations observers could in no feasible or practical way monitor the activities of the terrorists in Beirut."

The U.N. command here said it was prepared to send up to 60 observers under a French officer to Beirut to monitor the cease-fire. The sharp rejection of the Security Council resolution by the Israeli Cabinet effectively blocks the deployment of the observers, who are based in Lebanon, to the Beirut area.

The mounting American anger over the violence in Beirut was evident from Reagan's call for a withdrawal by Israeli forces to the lines they held prior to Sunday and his demand that Israel provide a two-week "breathing space" for the negotiations being conducted by U.S. special envoy Philip C. Habib.

The president, in a letter to Begin earlier this week, implicitly warned of a growing strain in American-Israeli relations and a possible suspension of U.S. arms sales if Israel did not show more restraint in its siege of Beirut.

But Israeli Foreign Minister Yitzhak Shamir, returning from meetings with administration officials in Washington, said earlier today that while the tone of Reagan's letter was "vigorous," it did not contain "threatening language."

Speaking to reporters at Ben-Gurion International Airport near Tel Aviv, Shamir also said that the possibility of American sanctions against Israel had not come up during his talks in Washington.

Tonight's Cabinet meeting took place amid signs of the dissent that has arisen in some quarters of Israeli society over the increasingly brutal siege of Beirut.

Outside Begin's office, members of Israel's small "Peace Now" movement held torches and chanted slogans denouncing the prime minister and Defense Minister Ariel Sharon.

By the time the mostly grim-faced ministers left the meeting near midnight, the demonstrators had gone home.

Meanwhile, military officials announced today that 19 Israeli soldiers were killed during the Israeli advance inside West Beirut yesterday. This raised the number of Israelis killed during the two-month war to 318.

Military officials described the Israeli moves in tactical terms, saying their forces had captured important vantage points from which they could observe and attack Palestinian strongholds further inside the city. They also said the moves were a reminder to the trapped guerrillas that the Israeli Army has the city surrounded and is capable of storming it in force.

In Cairo, Egyptian Foreign Minister Kamal Hassan Ali said Egypt will honor its commitments under the 1979 peace treaty with Israel although the "shock" of the Israeli invasion of Lebanon will force indefinite postponement of negotiations on Palestinian autonomy, United Press International reported.