A jailed dealer in Nazi artifacts has admitted that he forged the bogus Hitler diaries, and the journalist who purchased them for Stern magazine has been arrested on charges of fraud, West German authorities announced yesterday.

Stuttgart merchant Konrad Kujau, 44, who surrendered at a Bavarian border post May 14, told police that former Stern reporter Gerd Heidemann, 51, provided the paper for the fake diaries and helped stamp the Nazi seal on the volumes.

Heidemann, following his arrest Thursday at his Hamburg residence, denied that he played any role in concocting the diaries or knew in advance that they were fakes, according to his lawyer, Egon Geis.

Heidemann claims he purchased the diaries in good faith from Kujau, whom he knew as Konrad Fischer, for $3.75 million. But Kujau contends that he only received $1 million. Heidemann denied Stern's allegations that he sought "to enrich himself." He said he was paid only his salary, expenses and a bonus for uncovering the diaries.

Stern, the country's most widely read newsweekly--its paid circulation is 1.6 million--has not yet recovered any of the money it spent in acquiring the diaries. The magazine's publisher, Henri Nannen, filed suit for fraud against Heidemann on May 9 after West Germany's Federal Archives scrutinized several diary samples and declared them to be "blatant, grotesque and superficial forgeries."

Kujau, who told acquaintances he had worked as a designer and calligrapher in past jobs, originally claimed that he received the diaries through two high-ranking East German relatives. But when Stern tracked down the two sources he cited for the diaries, they turned out to be a railway station porter and a museum caretaker, according to Nannen.

The popular daily Bild Zeitung reported that Kujau signed his confession, "Yours truly, Adolf Hitler, alias Konrad Kujau." The newspaper said Kujau practiced for two years to perfect the old Germanic script used in the 62 fake volumes.

Kujau's tiny shop in Stuttgart, which peddled Third Reich flags, weapons and documents under the title of "militaria," has been locked and shuttered ever since Stern announced last month that its "star bloodhound" reporter, Gerd Heidemann, had uncovered the diaries after a three-year odyssey through Europe and South America.

Kujau's neighbors in the village of Bissingen recalled that he often complained about having to work "day and night" on a book about Hitler for Stern magazine.

When the diaries were revealed to be forgeries, Kujau dropped out of sight but later turned himself in at a border crossing, saying he had been duped by his East German connections. But Stuttgart police, who raided his home shortly after his incarceration, reportedly found a number of incriminating books, including a study of Hitler's handwriting.

Several West German experts on the Third Reich, notably Stuttgart Prof. Eberhard Jaeckel and Hitler biographer Joachim Fest, said they reviewed some papers and documents from Kujau's shop several years ago and quickly concluded that they were forgeries.

Heidemann, however, insisted that the diaries were legitimate, saying they were rescued from the wreckage of a plane that crashed in the last days of World War II near Boehnersdorf, in what is now East Germany. Historians have long argued whether the plane was part of an alleged convoy flying Hitler's private papers out of the Berlin bunker to a Bavarian redoubt.

Heidemann persistently refused to disclose his sources for the diaries, even to his editors, because he said that lives of East German sources were imperiled.

When the diaries were exposed as fakes, he reluctantly conceded after an all-night interrogation at Stern's offices that he purchased the 62 volumes in several installments from Kujau, whom he and other collectors of Nazi memorabilia knew as Fischer.

The soft-spoken journalist had long been known as an avid seeker of Hitler mementos. Ten years ago, he bought the former yacht of the Nazi Luftwaffe chief Herman Goering.

On occasional trips aboard the boat, Heidemann entertained former officers of the Third Reich, who he contends whetted his interest in the supposed existence of lost Hitler diaries.

Stern editors said they were skeptical about the tale when Heidemann first told them about it. But he was eventually granted the freedom and the money to track down and buy the diaries.

In the aftermath of the humiliating revelation that the diaries were a hoax, two of Stern's chief editors resigned. Many of its top journalists were infuriated that the magazine possessed some diary volumes for two years but refused to seek outside verification under the pretext of extreme secrecy.

When management appointed two conservative editors to replace those that resigned, about 200 Stern journalists staged a sit-in at the Hamburg headquarters to denounce the lack of consultation and the risk that the magazine's left-liberal slant, tinged with subtle anti-Americanism, might be changed.

West German commentators in press and television, with an evident touch of self-righteous delight, castigated Stern for its negligence. They charged that the magazine was motivated by an obsessive desire to reap a sensational scoop and a fortune in worldwide serialization rights.

Others lamented the timing of the hoax, as the Germans commemorated the 50th anniversary of Hitler's rise to power with a period of agonizing self-appraisal earlier this year through numerous films, television documentaries, books and exhibits on the Third Reich.