Foreign Minister Yitzhak Shamir indirectly confirmed today that Israel is holding talks with the Palestine Liberation Organization over the fate of eight Israeli soldiers being held by the PLO in Lebanon.

Testifying before a closed session of the Israeli parliament's Foreign Affairs and Defense Committee, Shamir said efforts to gain the freedom of the prisoners are not confined to the negotiations with Lebanon that started last week.

Asked about reports of direct Israeli-PLO contacts in Europe on release of the prisoners, Shamir reportedly said that Israel has resorted to methods it previously had rejected on political grounds. According to the state-run Voice of Israel radio, he justified this on the grounds that "in Jewish law the redemption of prisoners from captivity is of the first importance."

Israel has vowed never to deal with the PLO, which it calls a "terrorist" organization.

A spokesman for the Foreign Ministry refused to confirm or deny Shamir's reported comments, which were the first from a government official even indirectly confirming the contacts with the PLO. Shamir refused to disclose any details of the contacts but said that some reports regarding them were inaccurate.

The first report of Israeli-PLO contacts appeared last week in Newsweek magazine, which said they were being held under the auspices of Austrian Chancellor Bruno Kreisky. Kreisky later said that the families of Israeli soldiers captured during the war in Lebanon had asked him to mediate for their release "with the knowledge of the Israeli government," but he refused to discuss the details of his efforts.

Last week, Abdallah Frangi, PLO representative for West Germany and Austria, confirmed that "indirect contacts" with Israel were in progress. But the PLO's military leader, Khalil Wazir, known as Abu Jihad, told Palestinian guerrillas in Lebanon's Bekaa Valley Saturday that reports about "negotiations with the Zionist enemy concerning the release of eight Israeli prisoners" were false, the PLO news agency WAFA said.

According to Israeli sources, Israel's representative in the contacts with the PLO is Arie Eliav, a former Knesset member of the left-wing Sheli Party. Eliav reportedly is dealing with Issam Sartawi, the PLO's representative in Vienna, with whom he has met in the past.

Since Eliav is not a member of either the government or the Knesset, his role as contact with the PLO would allow the Israeli government to distance itself from the discussions and assert that any contacts with the PLO are "unofficial."

Virtually nothing is known here of the progress, if any, of the Israeli-PLO contacts, which have attracted little attention in Israel. The government has never denied it is dealing directly with the PLO but has sought to keep as much distance as it could from the talks.

The Israelis have said they will not negotiate with the PLO even if the organization's leaders publicly proclaim their acceptance of Israel's right to exist, and clearly they do not want to be caught doing just that in pursuit of their own goals.

The eight prisoners are being held by the PLO in eastern Lebanon and Israel has made their release a precondition for the withdrawal of its troops from southern Lebanon. The Israelis are also demanding the release of three soldiers held by Syria.

The Israelis are holding several hundred Syrian prisoners and about 6,000 Palestinians whom the PLO is demanding be released in return for the eight Israelis. Israel has indicated no opposition to releasing most of these prisoners, but only if its other conditions for withdrawing from Lebanon, including the return of its own eight soldiers, are met.