A Palestinian daily newsletter that circulates almost exclusively to foreign correspondents and diplomats here has come under attack by Israeli authorities who have accused its editors of publishing a newspaper without a government license.

The newsletter, which normally contains translated articles from Arabic newspapers in East Jerusalem, including reports from the Israeli-occupied West Bank, has been published since 1978 by the East Jerusalem-based Palestine Press Services. But circulation of the newsletter came to an abrupt halt earlier this month after its editors received an "ultimatum" from the Israeli Interior Ministry, according to Ibrahim Karaein, the editor of the newsletter.

Karaein said that on April 14 Palestine Press Services was notified by Rafael Levy, an Interior Ministry official, that it was violating the law and that action would be taken against it if it did not stop publishing the newsletter immediately.

Karaein charged the new demand for a newspaper license was "an attempt to put us out of business."

Levy was said by his office today to be out of the country. Another official who deals with licensing of newspapers, Itzhak Agassy, could not be reached for comment.

Aviva Shimoni, a spokeswoman for the Interior Ministry, said the only problem with the newsletter was the lack of a license. She said that it would take two to six months to obtain one.

Informed that the newsletter has been published since 1978 and is distributed daily to foreign correspondents in their mail boxes at the Israeli government press office, Shimoni replied, "It's impossible."

The newsletter contains brief English-language summaries of news articles from the Arabic press as well as editorials from East Jerusalem's daily Arabic newspapers. Until last fall, the Palestine Press Services also published a daily bulletin on events in the occupied West Bank and Gaza Strip reported by its own contacts in the territories.

The newsletter has a circulation of about 60. Foreign correspondents rely on it for tips on developments in the West Bank and Gaza and to keep abreast of Palestinian attitudes as reflected in the Arabic press.

During times of turmoil in the West Bank, the Palestine Press Services also supplies information on incidents that is frequently at odds with the official version supplied by Israeli occupation authorities.

Karaein said Levy first raised the license issue last September. In response, he said the Palestine Press Services stopped publishing its own bulletin on West Bank developments and began informing subscribers of incidents in the territory by telephone.