The Israeli Foreign Ministry said today that an injured Lebanese child whose photograph deeply moved President Reagan was not as severely hurt as the photograph and accompanying caption suggested.

A picture of the child, by United Press International, was published Aug. 2 in The Washington Post. According to White House accounts, the photograph deeply upset the president.

The caption said the seven-month-old child, shown cradled in the arms of a nurse, lost both arms and was severely burned on the afternoon of Aug. 1 "when an Israeli jet accidently hit a Christian residential area in East Beirut during a raid on Palestinian positions in the west."

Israeli officials said today that the child had been located. But confusion still surrounded the case.

Two weeks ago, the Foreign Ministry announced that investigations by military authorities had determined that the child was injured as a result of shelling of East Beirut by Palestine Liberation Organization forces. UPI issued a statement standing by its version of the child's injuries.

Today, a Foreign Ministry spokesman reiterated the assertion about the source of the child's injuries and said he had not lost either of his arms.

The spokesman said the child, located by Health Ministry investigators, had suffered broken wrists as a result of the fighting and looked as if he had lost his arms because of the bandages.

However, one of the doctors said to have conducted the investigation, interviewed on Israeli radio said the child suffered a superficial burn on the face and a fracture of the upper left arm. He said nothing about the child's wrists.