Secretary of State George P. Shultz arrived in Israel today and immediately moved to assuage bitterness here over President Reagan's visit this past Sunday to a German war cemetery.

On the first stop of a three-day Middle East visit, Shultz laid a wreath and planted a tree at Yad Vashem, the memorial to 6 million Jews exterminated by Nazi Germany in World War II and declared in an emotional speech that Israel is "the true witness to the Holocaust and the truest symbol of the victory of good over evil." For this reason, Shultz said, "Israel must endure" and "the American people are forever committed to Israel's security."

Shultz began his first Middle East peace mission in almost two years amid mixed signals from Israel's coalition government and forecasts from U.S. officials that no breakthrough toward new Arab-Israeli negotiations is in sight. On the critical question of Palestinian representation in any possible talks, leaders of both main parties said that no member of the Palestine National Council would be acceptable, although a formal government position had not been reached.

It was the Bitburg visit that first dominated Shultz's day here, however.

After a relatively low-key reaction to the cemetery visit at a time when it was being heavily criticized in the United States by veterans and Jewish groups, among others, Israeli leaders from Prime Minister Shimon Peres on down shifted earlier this week to a posture of sharp criticism. Shultz became the first top U.S. official to meet with the Israeli leadership after the Bitburg ceremony.

A small group of demonstrators protested against today's ceremony.

Shultz told Israeli Foreign Minister Yitzhak Shamir that Reagan, by visiting the Bitburg cemetery, had "no intention of equating the graves of SS Nazis with the graves of Holocaust victims." Shamir had complained, according to Shamir's own account, that Reagan's Bitburg visit had been "a big mistake of a great friend." Shultz's visit to the Holocaust memorial was planned and announced well before Reagan's controversial cemetery stop in West Germany was scheduled. Originally, Shultz was coming only to Israel and for only this ceremonial purpose, but his trip was expanded to include Egypt and Jordan because of growing hopes for the convening of new Arab-Israeli negotiations.

Jordan's proposal for joint Jordanian-Palestinian delegations to pursue discussions with the United States and Israel over the West Bank and Gaza has been the focus of diplomatic discussion for weeks and continued to be a central topic for Shultz and Israeli leaders today.

Foreign Minister Shamir, the leader of the Likud faction of Israel's eight-month-old unity government, went out of his way to say he told Shultz in a private meeting that "we will not accept" members of the Palestine National Council, the PLO legislature in exile, as negotiators in the peace process.

But Defense Minister Yitzhak Rabin, a former prime minister and a leader of the government's Labor party faction, said no government decision has been made about participation of Palestine National Council members in peace negotiations.

Rabin said he personally would accept any resident of the West Bank and Gaza, regardless of affiliation, as part of a delegation to negotiate for peace.

Later, a spokesman for Prime Minister Peres, the top Labor party leader, said Peres agrees that Palestine National Council members would not be acceptable to Israel. The spokesman said no formal governmental decision has been taken on this point, however.

A senior U.S. official accompanying Shultz suggested that the U.S. position on participation of Palestine National Council members was more flexible. The official said that members of the Palestinian legislature are not considered "identified PLO membrs" by the State Department for the purpose of deciding on visas to the United States. Shultz held separate meetings with Shamir and Peres, the leaders of the two major factions in the government.

Shultz has not been in the Middle East since July, 1983, when he failed to enlist Syrian support for a Lebanese-Israeli pact he had negotiated two months earlier. The pact was later abrogated by Lebanon despite strenuous efforts of Shultz to save it. Shultz's lack of success in Lebanon, where U.S. troops were withdrawn over his objections early last year and where Israeli troops are now withdrawing, "burned his fingers" in the region, an Israeli official said.