Senior Israeli government officials from the Labor Party today defended the release of 1,150 Arab prisoners, including several convicted terrorists, against a wave of angry protests and demands that Jewish suspects now standing trial here on terrorism charges also be freed.

Defense Minister Yitzhak Rabin, meanwhile, warned that he "will not hesitate to recommend the detention of all those who were released yesterday into areas we control" if Arab organizations attempt to seize other Israelis to bargain for the release of prisoners still held by Israel.

The prisoner exchange brought freedom to three Israeli soldiers, who were joyfully reunited with their families at an Israeli Air Force base near Tel Aviv early this morning, and provoked a sharp political controversy over the price of ending their captivity in the hands of the radical Popular Front for the Liberation of Palestine-General Command headed by Ahmed Jibril.

As many as 40 percent of the freed Arab prisoners were said to be serving life sentences for serious crimes, including murder and acts of terrorism. Their release, and the agreement to allow them to return to their homes here, were unprecedented in Israel's history of prisoner-exchange agreements.

Those freed included Kozo Okamoto, a Japanese Red Army terrorist involved in the 1972 Tel Aviv airport massacre in which 26 persons were killed; Ziad Abu Eian, convicted of planting a bomb that killed two youths in Tiberias in 1979; and two members of a Fatah squad involved in a 1978 attack on a bus that killed 33 Israelis.

Yet the thrust of debate here today focused on whether it was right for Israel to keep Jewish terrorism suspects in custody after it had freed convicted Arab terrorists.

Several critics of the deal, reportedly including Foreign Minister Yitzhak Shamir, leader of the right-wing Likud bloc in the national unity government, linked the release of the Arab prisoners to the so-called "Jewish underground" trial here and said the Jewish suspects should now be released.

Israeli radio quoted Shamir as telling a closed meeting of the parliamentary Foreign Affairs and Defense Committee today that while Jewish terrorism against Arabs was "a threat to the basic character of the state," it would "serve the national interest to bring a speedy conclusion" to the trial of the Jewish suspects.

Other Likud officials, including former defense minister Ariel Sharon, now minister of industry and trade, openly demanded release of the Jewish terrorism suspects.

Shamir and Sharon both had voted in favor of the prisoner-exchange agreement when it was approved unanimously several weeks ago by the Israeli Cabinet.

The suspects in the Jewish underground case were arrested last year on charges of murder, attempted murder and membership in a terrorist organization.

The underground organization, made up largely of Jewish settlers from the Israeli-occupied West Bank, was accused of responsibility for the 1980 bombings that maimed two Arab West Bank mayors, the 1983 assault on the Islamic College in Hebron in which three students were killed, and an unsuccessful attempt last year to blow up several Arab civilian buses.

Originally, 25 men were charged in the case and 14 remain on trial. The others accepted reduced sentences.

Sharply differing public reactions to the prisoner exchange emerged last night and today as military censorship that had prevented reporting of the agreement was lifted. In Hebron, on the West Bank, angry Jewish settlers demonstrated and later fired guns into the air to break up a group of Palestinians who were celebrating the return of some of the Arab prisoners.

There was joy at the air base this morning among relatives of the freed Israeli soldiers, but bitterness outside Israel's parliament, where 15 wives and mothers of suspects in the Jewish underground case began a hunger strike.

"It is impossible that they should go free and our boys who worked for the country should stay in prison," said Aviva Segal, the mother of one of the men on trial. "It's just not moral."

The controversy over the terms of the exchange, and particularly the attempt to link it to the Jewish underground case, also appeared to divide government ministers from the rival Labor Party and Likud bloc that make up the national unity government here. Most Labor ministers and members of parliament said they opposed any intervention in the Jewish underground trial and said this case could not be compared with the negotiated prisoner-exchange agreement.

The prisoner exchange was defended by former prime minister Menachem Begin of the Likud bloc, who told Israeli radio that no connection should be made between it and the Jewish underground case.

At the Air Force base near Tel Aviv, where he and other senior officials greeted the returning soldiers just after 5 a.m. today, Rabin refused to discuss the underground case but strongly defended Israel's decision to go through with the elaborate prisoner exchange.

"We have done what we should have done," he said. "I believe it is my responsibility as the minister of defense to bring back home every soldier who was sent to war by this government, even though the price is high.

"We have done it in the past, we paid heavily in the past. We have paid now. This is our way and this is the right way."

In the exchange, Israel freed 121 men from Jibril's faction captured during the 1982 war in Lebanon and 150, mostly Lebanese, who were detained during the Israeli occupation of southern Lebanon.

But the bulk of the freed prisoners, numbering 879, were Palestinians who were released from prisons in Israel, the West Bank and the Gaza Strip. Of these, about 600 chose to return to homes in the area, while the others decided to be taken abroad.

A senior Defense Ministry official indicated that, while there were no restrictions on the newly freed prisoners, they would be watched closely by Israeli security agencies. He also said that Israel had refused to release a handful of prisoners whose freedom was originally demanded by Jibril's organization, mostly those convicted of recent and "very grave" crimes.