srael and Lebanon made significant progress this week in negotiating security arrangements in southern Lebanon but remain sharply at odds over the key issue of what role former Lebanese major Saad Haddad will play in the area, a senior Israeli Foreign Ministry official said today.

The official said that Lebanon yesterday agreed in principle that Israeli-Lebanese military teams regularly would patrol a security zone in the south after Israeli troops withdraw.

Lebanese Foreign Minister Elie Salem was quoted by Beirut state radio as agreeing that the two sides had made progress. But he stressed that "there has been no final agreement on any of the issues currently under discussion with Israel."

The Israeli official, who is familiar with the details of the negotiations, said Israel considers it "absolutely essential" that the troops that police southern Lebanon in the future be under the command of Haddad, whose own militia has long been supplied and supported by Israel.

He said Haddad's role is the key to reaching agreement on the security arrangements, which in turn is the key element holding up an overall agreement for a troop pullback.

"We feel we can reach agreement very soon if we can break this Haddad thing," he said.

The Beirut government has been unwilling to allow any formal role for Haddad, who faces longstanding treason charges in Lebanon for forming his militia and establishing a conclave under his rule in a strip of land along the Israeli border.

In describing the progress made in the talks this week, the Israeli official said that the agreement in principle was for joint military "supervisory teams" to patrol a 25-to-30-mile-wide security zone in southern Lebanon after an Israeli withdrawal. He said "a great deal of agreement" was reached on this and other security questions during yesterday's negotiating session in the northern Israeli town of Qiryat Shemona.

The official denied that the talks are deadlocked. But he said Israel was inflexible in its demand for a command role for Haddad in the security zone.

"We see the alternative as a return of terrorists to southern Lebanon, with all that would mean for us and the Lebanese," he said.

Israel originally demanded the right to maintain a number of military outposts in southern Lebanon after the bulk of its forces had withdrawn from the country. While they have not formally dropped that demand, the Israelis long ago signaled their willingness to consider alternatives, including regular patrols of the south by joint Lebanese-Israeli Army forces.

The reported agreement on joint "supervisory teams," a term used previously by the Lebanese to describe what they might accept in place of permanent Israeli military outposts, appeared to represent a compromise on this issue. But the Israelis consider that supervisory teams alone would not be enough to prevent a return of Palestinian guerrillas to southern Lebanon, leading them to reiterate their demand for a key role for Haddad and his 1,000-to-2,000-man militia in the security zone.

According to the Israeli official, Lebanon already has indicated its willingness to allow Haddad's men to be part of a larger southern Lebanese security force. He said Israel is insisting that they also remain under Haddad's personal command, less out of loyalty to its longtime ally than fear that without his presence his men will melt into the Lebanese Army and lose their effectiveness.

"We know that he is highly motivated and that he commands the respect and following of his troops and can help maintain their motivation," the official said. "We know new recruits to the southern Lebanon brigade will come into it under that framework. The real issue is how the force will be integrated and recruited. If Haddad stays, his men will be the driving force behind it."

It is also widely assumed here that a Lebanese force under Haddad's command would be more cooperative with the Israeli Army than if placed under commanders chosen by the Lebanese government. Such cooperation could be critical if, for example, the Israelis should later demand to reenter Lebanon in force to pursue guerrillas that had reinfiltrated the area.

The official said Israel's security demands in the negotiations are based on two key premises. One is that the Palestine Liberation Organization will be denied freedom of action by Israel's other Arab neighbors--Egypt, Jordan and Syria--and will have no choice but to seek to return to southern Lebanon if it wishes to continue its "policy of armed struggle" against the Jewish state.

The other premise is that no international force would be effective in combating the guerrillas and that the Lebanese Army may need two years or more to build itself into an effective fighting force. It is during this "gap" that Haddad's role is so crucial to Israel, the official said.

The official said the progress made in the talks this week was based largely on ideas proposed by the United States during Foreign Minister Yitzhak Shamir's trip to Washington last month, and he expressed no strong complaints about the American role in the negotiations. But he said that on the question of Haddad, the United States has supported Lebanon's objections and has not proposed alternatives to Israel's demand.