Time magazine conceded in court today that a key detail in the February 1983 article at issue in Ariel Sharon's $50 million libel lawsuit was false but said it continued to believe that the article was substantially true.

The admission by Time's lead attorney, Thomas Barr, followed an inspection Sunday in Jerusalem of secret Israeli documents detailing Sharon's actions shortly before the 1982 Beirut massacre. That review, conducted by retired Israeli chief justice Yitzhak Kahan, uncovered no evidence to support the disputed portion of the Time article.

"We're standing by our commitment to make a retraction in the magazine ," said Time spokesman Mike Luftman, "but we're not going to discuss what we might do while the case is before the jury."

In a highly unusual and unexpected action, Judge Abraham D. Sofaer expelled reporters and spectators from the courtroom for about 10 minutes this morning while the jury heard Time's "reservations" about the conclusions Kahan drew during the review of the secret papers.

Sofaer said he felt compelled to do so because of an agreement he made with the Israeli government.

The Washington Post and several other news organizations formally challenged the decision during a brief hearing before Sofaer this afternoon, but the judge did not relent and said he would take similar action during a portion of closing argument if Israeli officials continue to rebuff his efforts to allow Time's reservations to be made public.

The 2nd U.S. Circuit Court of Appeals said it would rule early Thursday on an appeal of Judge Sofaer's order. The judge retained acting U.S. Attorney William Tendy as his lawyer.

After the massacre of hundreds of Palestinians in September 1982, a three-member Israeli commission headed by Kahan concluded that Sharon, then minister of defense, bore "indirect responsibility" for the killings because he had failed to foresee they might occur when he sent Israel's allies, Lebanese Christian Phalangist militiamen, into two Beirut refugee camps.

Israeli soldiers were posted outside the camps during the 36-hour rampage, but the commission said its inquiry found no evidence of any direct involvement by any Israeli in the killings.

Time, reporting on the commission's findings in a Feb. 21, 1983, cover story, said the magazine had learned, however, that investigators had turned up more damaging information on Sharon's role that was not made public. Time alleged that a secret appendix to the commission's report, called Appendix D, contained details of a conversation Sharon had with Phalangist leaders the day before the massacre began in which Sharon discussed with them the need to take revenge for the assassination of president-elect Bashir Gemayel, the militia commander, who had been killed in a bomb explosion a day earlier.

Barr conceded today that there was now "clear and convincing evidence" that no such conversation was contained in the appendix.

In order to prove libel, however, Sharon must convince the jury that the article not only was false but also that it defamed him and was written in a spirit of "actual malice," meaning that Time either knew it was false or had serious doubts about its accuracy.

Although Barr did not elaborate, it appeared clear that his concession was based on the review Sunday in Israel of the secret appendix, notes of conversations Sharon had with Phalangists and secret testimony given to the commission by some of the participants in those meetings.

Two Israeli lawyers, one representing Time and the other Sharon, were permitted to examine the documents Kahan reviewed but under the terms of an arrangement suggested by the judge had to sign an agreement pledging not to reveal what they had seen.

Later, through the judge's intercessions, the Time representative was allowed to express his reservations with Kahan's conclusions to magazine officials and to the court here but Israeli government lawyers, according to Sofaer, said they felt the Israeli cabinet decision allowing Time access to the documents specifically ruled out public disclosure of the reservations.

The Israeli government did broadcast over state radio Monday morning, however, Kahan's responses to questions by Sofaer on the content of the documents.

Sofaer said today, "My only role in connection with the publication of that statement was to prevent its publication in the United States. . . until it had been published in Israel."

The judge also said he felt it was unfair and gave the appearance of impropriety that Time's responses were not also made public. He said he had argued this in three or four telephone conversations with an Israeli government lawyer over the last 48 hours.

In the afternoon, Sofaer's decision to seal the courtroom was contested by attorney Floyd Abrams in behalf of The Washington Post, The New York Times, Newsweek, the Philadelphia Inquirer, CBS and NBC. Other attorneys representing the Associated Press and Newsday also challenged the action.

Abrams said that while sealing a courtroom may be justified in rare cases involving testimony of rape victims or juveniles, he believed Sofaer had exceeded his authority in doing so in this case.

"The question is," said Abrams, "may your honor agree, so to speak, with the government of Israel to a procedure the effect of which is that the press and public are excluded from part of what otherwise would have been an open trial."

Sofaer's failure to hold a hearing before expelling the press could be grounds for "reversible error," Abrams said.

Sofaer shot back: "If you think that kind of technical oversight is reversible error, I wish you luck."

But the judge said he would continue to try to persuade Israeli government lawyers to allow the information to be disclosed.