President Yitzhak Navon, thought by many to be the only Israeli political figure capable of leading the opposition Labor Party to victory over the Likud Bloc coalition of Prime Minister Menachem Begin, announced today that he is leaving the presidency, thereby positioning himself for a possible return to active political life later.

Navon, who has held the ceremonial post since 1978, informed Begin last night that he does not wish to be elected by the Israeli Knesset (parliament) to a second five-year term. He will leave office when his term expires on May 4.

Speculation on Navon's successor as president has centered on Yosef Burg, a leader of the National Religious Party and interior minister in the Begin government.

In a statement today, Navon said, "I am not planning and I do not intend to enter political life." He said he would devote his time out of office to "writing and activity in social and educational areas."

Israeli political custom dictates that a retiring president remain out of active politics for a period after leaving office and Navon's statement was not interpreted as precluding a later attempt to assume the leadership of the divided Labor Party.

"A man of Navon's caliber and prestige cannot stay out of politics," said Chaim Herzog, a Labor Party Knesset member.

Navon, according to a number of political analysts here, is unlikely to mount an active campaign to replace Shimon Peres as head of the Labor Party but will probably wait for party support to develop in an Israeli version of a political draft.

Navon's announcement was one of two widely anticipated events here that could shape a possibly tumultuous year in Israeli politics. The other is the scheduled disclosure in mid-February of the findings of the commission that has been investigating last September's massacre of Palestinian refugees in West Beirut.

Begin, Defense Minister Ariel Sharon, Foreign Minister Yitzhak Shamir and six other officials have been warned by the commission that they are liable to be harmed by the conclusions of the investigation. Direct criticism of the government for its behavior before and during the massacre, it is believed here, could prompt Begin to demand early elections and a renewed mandate.

In that event, a number of Labor Party officials have made clear they would look to Navon for leadership. At 61, the Israeli president is a popular figure throughout the country, while Peres and former prime minister Yitzhak Rabin have waged a long and bitter personal feud which has divided and weakened the party.

In addition, because Navon is a Sephardi or Oriental Jew whose maternal ancestors were from Morocco, it is assumed by some that he could draw large numbers of votes from the Sephardi majority which forms the bedrock of Begin's support.

A number of analysts, however, question that theory as well as Navon's overall ability to lead the Labor Party back to the power it enjoyed until Begin's stunning victory in 1977.

These critics say that Navon's personal popularity stems from his position as president, which puts him "above politics" and does not involve him in the myriad of controversial issues facing the Israeli government. A scholarly looking man known for his inclination to seek compromise, Navon has never been tested in the rigors of an Israeli election campaign as the head of a party ticket and some question whether he is tough enough to take on Begin.

Navon is no novice to politics, having served as chairman of the Knesset's important Foreign Affairs and Defense Committee under the last Labor government. Recent published polls show him as the most popular potential leader of the Labor Party. They also suggest that a Navon-led Labor Party would make inroads into the Likud Bloc's support but not enough to topple it.

According to today's Jerusalem Post, Peres is willing to give up the party leadership and accept the number two spot--and the posts of deputy prime minister and foreign minister should Labor win the next election--to clear the way for Navon. According to this report, Rabin would be named defense minister in a Labor government but has not indicated whether he is willing to go along with the proposal.