After months of governments' wrangling over whether southern Lebanon's Palestinian camps would be rebuilt, the refugees themselves are erecting rows and rows of small, boxy, tin-roofed shelters permitted by an Israeli policy reversal.

Israel considered the five camps near the cities of Sidon and Tyre, which house approximately 60,000 persons, to be "hotbeds of terrorism" and attempted to bulldoze them into oblivion after shelling them heavily during its invasion last summer.

Now, apparently under a combination of pressure from western public opinion and the stubborn persistence of the refugees themselves, the Israeli government is buying the cinderblocks for the homes and heaters for when they are completed. The shelters are springing up on vast stretches of open fields, some leveled by bulldozers that swept away the rubble of destroyed homes.

The stores, hospitals and social organizations that the Palestine Liberation Organization had established in its state-within-a-state are not being rebuilt in this Israeli-occupied area 25 miles south of Beirut.

Few men between the ages of 16 and 60--prime candidates for PLO membership and leadership--are seen. They are said to be in the Ansar prison camp 13 miles south of here or to have fled behind Syrian lines in northern and eastern Lebanon. Some were evacuated from Beirut to eight Arab nations together with the PLO leadership.

Thousands from the camps still are homeless. Some have moved in with relatives. Others have taken over schools and other public buildings--"anything with a roof," according to Geoff Shakespeare, U.N. Relief and Works Agency administrator here. Some families have established temporary residence in the modern underground parking garage in busy downtown Sidon.

Initially, Israel's plan reportedly was to disperse the refugees and integrate them into the local population, but relief workers say that there was strong hostility among Lebanese against the Palestinians. The Israeli Army has taken special care to protect Palestinians here from being the victims of attacks after the massacres of Palestinians in September at the Sabra and Shatila camps of West Beirut.

Moreover, the Palestinians insisted on being allowed to return to their homes. In the early fall, U.N. workers said, many refugees went back to the leveled fields laying out stones to mark the sites of their former residences.

In the autumn, Israeli officials relented after pressure from the United States and adopted a policy of allowing tents to be erected over cement-tile floors and waist-high cinderblock walls.

There were further delays, however, because Lebanese authorities were slow in giving U.N. workers a clear mandate to set up tents, according to U.N. officials. The Beirut government was in disarray and wary of rebuilding camps that again might become targets for the Israelis.

When the tents finally went up starting in November, they did not satisfy the Palestinians. Refugee protesters, who demanded permanent houses, repeatedly burned down tents almost as soon as they were put up.

Later last year the Israeli policy changed again to allow permanent structures to be erected, and Israel agreed to donate the cement for them to be built. Israeli charitable agencies have provided clothing for refugees, and the U.N. relief agency is providing an allotment to families to purchase the cinderblocks.

The camps themselves present a dreary picture. The shelter is basic and rudimentary. Deeply rutted roads running through them quickly become narrow rivers in the frequent cold winter rains here. Many are without electricity, and U.N. workers complain that the local power company stalls in restoring service.

Veteran observers say that there was structure and order in the camps' society when refugees first settled here in 1948. They were said to be sectioned off by groups from the towns and cities of British-mandated Palestine. That structure was replaced by the PLO when it established itself in the camps in the late 1960s and early 1970s.

Now the Israelis are attempting to create a new hierarchy by organizing sympathetic camp committees that coordinate activities with the occupying army. Those committees, however, are said to have failed to win the respect of the Palestinians.

Most refugees feel protected by the Israeli soldiers who guard the camps, volunteers say. But the Palestinians rarely go into the towns further south because they fear local militias that Israel has armed.