King Hussein of Jordan has refused to accept a U.S. explanation of its veto earlier this month of a U.N. Security Council resolution opposing Israeli settlements in occupied Arab lands, calling the Reagan administration's action "a very dangerous and shocking development."

Hussein, one of America's closest allies in the Arab world, said that the U.S. veto was "totally unacceptable" and that the explanations he has received from Washington are "certainly inadequate and unsatisfactory as to the reasons" for it.

The Jordanian monarch discussed the veto in an interview in Amman with free-lance journalist Lally Weymouth, whose account was published today in the Los Angeles Times.

While the Aug. 2 veto has brought criticism from several Arab countries, U.S. officials have insisted that it does not represent a change in the position of current and previous administrations that the Jewish settlements in the Israeli-occupied West Bank, Gaza Strip and Golan Heights are illegal.

The resolution, which was supported by 13 Security Council members with the United States casting a veto and Zaire abstaining, would have imposed international trade sanctions on Israel for failing to remove its settlements from occupied Arab lands.

The Reagan administration stirred further controversy the day after the veto when State Department spokesman John Hughes defended it, saying that the resolution was flawed, among other reasons, because its call for dismantling the existing settlements was "an impractical demand."

Hughes also said that the veto represented no departure from President Reagan's call last Sept. 1 for a freeze on Israeli settlements and later U.S. statements that further settlements in occupied territories are an obstacle to the Middle East peace process.

Hussein noted that the United States previously had supported resolutions condemning the acquisition of territory by war and had made this position a part of the Camp David accords.

"To turn around suddenly and say that these activities, the taking of people's lands, could be construed as legal is something very, very serious," he said.

Hussein also said he was disturbed by the split within the Palestine Liberation Organization, in which a group of guerrillas supported by Syria has challenged the leadership of Yasser Arafat.

"If this trend continues," he said, "it will be an indication to us and to many in this area that the PLO has lost its legitimacy as an independent, free, sole legitimate representative of the people of Palestine."