The streets of this mainly Sunni Moslem port city were virtually deserted today, with a few grim-faced residents huddled in hallways listening to sporadic battles nearby between Christian militiamen and Palestinian guerrillas.

The fighting, which involved Israeli-backed Christian militiamen entrenched in the hills east of Sidon and Palestinian fighters in the Ain Helweh and Miyumiye refugee camps on the edges of the town, was the most severe Sidon has seen since the Israeli invasion in 1982.

Nazih Bizri, a member of parliament from Sidon, said 40 people were killed and about 100 wounded in the last two days of combat. The Lebanese Army, backed by Moslem militiamen, also participated. Hundreds of families fled Sidon during the weekend and several thousand Palestinians from Ain Helweh sought refuge in Sidon.

Fuad Siniora, an adviser to Rafiq Hariri, a prominent Saudi-Lebanese businessman and philanthropist from Sidon, said the Lebanese Forces Christian militia was shelling refugee camps and the fringes of Sidon from nearby villages and positions near Kfar Falous "supported by the Israelis."

Lebanese Moslem leaders, including Nabih Berri, Cabinet minister for southern Lebanon, and Prime Minister Rashid Karami, have accused Israel of instigating the hostilities around Sidon to cause an exodus of Christians to a border strip that would act as a protective buffer along Israel's northern border.

Berri, leader of the mainstream Shiite Amal movement, said the evacuation of Palestinians was aimed at provoking a reaction against Sidon's native Christians. More than 6,000 Christians, many of whom had stayed even during the Israeli invasion, left Sidon during the past two days. Some headed to Beirut, Siniora said, while others left their homes in towns east of Sidon for areas in Kfar Falous.

Bizri said the bodies of two Christians were found on a road leading to Sidon while he was trying to negotiate the release of five others held by a Moslem Nasserite organization.

Fighting in Sidon broke out 11 days ago, just one week after rebellious Christian commanders revolted against the leadership of the Phalange Party and the established chiefs of the Lebanese Forces. Christian militiamen east of Sidon declared their allegiance to rebel commander Samir Geagea, whose movement reportedly is allied with Israel, despite public denials.

Bizri said Israeli helicopters have been dropping pamphlets urging Christians to leave the Sidon area. About 70,000 Sunni Moslems, 20,000 Shiites and 10,000 Christians live in Sidon, but the towns east of it were inhabited mainly by Christians before the fighting started. Bizri charged that the Israeli-backed South Lebanon Army commanded by Antoine Lahad has joined the fight in a bid to depopulate the Christian quarters and portray the battle as one between Lebanese and Palestinians.

Bishop Ibrahim Helou, head of the Maronite Christian community in Sidon, who was instrumental in ensuring Christian-Moslem cooperation in preventing sectarian fighting in the wake of the Israeli withdrawal Feb. 16, also pointed an accusing finger at the Israelis.

"Israel is not far from this," he said today. "It is pulling all the invisible strings. Israelis have been talking about sectarian fighting for over a month, and now it is happening."

Phalange Party leader Elie Karameh underlined the split with Christian rebels by calling for the Army to take control of Sidon. He denounced the "behavior of certain elements hiding behind the Phalange banner," a reference to Christian dissidents. Both Helou and Bizri said the only way to save Sidon would be by reinforcing the Army.

Bizri lamented the status of the Army dispatched to Sidon and its environs to fill a vacuum after the pullout of Israeli troops. "Lebanese soldiers are at a disadvantage -- in arms, numbers and orders," he said, indicating they had no clear orders to fight back.

Sunni Moslem militiamen have outdone the Army in shooting back at the Lebanese Forces.

Bizri said he was doing his best "to keep my people quiet. We are giving time to the Army to defend Sidon. If it doesn't, there will be other measures." Both he and Siniora complained that despite daily pleas to the Beirut government to boost the strength of the Army, all that was received was "80,000 bullets."

Bizri said the Christian militias were shelling the Palestinian refugee camps with artillery, while Palestinian guerrillas were responding with small arms. There are no heavy weapons in the camps and only machine guns and occasional rocket-propelled grenades could be heard in response to the shelling. Guerrillas were using rusty Kalashnikovs today that they said had been "buried underground since 1982."

Dr. Ghassan Hammoud, who runs the Hammoud Hospital in Sidon, said 27 major operations were performed on casualties brought in yesterday and today.

Siniora said four or five families were living in each home in central Sidon.

"We have opened mosques and schools to accommodate them. Sidon needs all sorts of help, medical supplies, food, not to speak of ammunition," he said, adding that 40,000 people had been displaced.

Leila Mekkawi, an employe at the Hammoud Hospital, recalled the joy in Sidon on Feb. 16 when Moslems and Christians, whose civil war had begun there in 1975, celebrated the departure of the Israelis. "It was a real feast," she said. "We thought then that the war, which started in Sidon, would end in Sidon."