The White House said last night that it was "saddened and outraged" by the killing of an American aboard the hijacked Italian cruise ship and called upon Egypt not to release the four Palestinian terrorists responsible for the killing as it had initially agreed to do.

White House spokesman Larry Speakes said the administration had communicated to the Egyptian government "in strong terms" that the terrorists responsible for the killing of Leon Klinghoffer should not be allowed to leave Egyptian territory and should be brought to justice.

"We are particularly distressed that there has been no announcement yet that those responsible will be turned over to the appropriate authorities for prosecution and punishment," he said.

"The United States remains determined to see that those responsible for the henious act be brought to justice and punished to the maximum extent. There must be no asylum for terrorists or terrorism," he said. "The responsibility for handling the resolution of the affair lies with the Egyptian government."

The strong administration reaction came after the U.S. ambassador to Egypt, Nicholas Veliotes, visited the ship at anchor about five miles off the Egyptian coast near Port Said to investigate reports an American hostage had been killed.

He reported back to the State Department early last night that Klinghoffer had been murdered by the terrorists off the coast of Syria Monday when they were attempting to gain the attention of Syrian authorities. The 69-year-old Manhattan resident, a victim of a stroke, had been confined to a wheelchair.

In his monitored communications with the U.S. Embassy in Cairo from aboard the ship, Veliotes, clearly angered by what he had learned, ordered the embassy to telephone the Egyptian foreign ministry to tell them what had happened and to "insist that they prosecute those sons of bitches."

U.S officials said they did not known the exact whereabouts of the four terrorists, to whom Egypt had promised safe passage out of the country in return for surrender. But they said they thought that they were in Egypt.

Earlier, an Egyptian official here said the four terrorists had never entered Egyptian territory but left immediately for an undisclosed destination aboard another boat upon disbarking from the Italian cruise ship. There has been no independent confirmation of this, however.

The Egyptian official said this had been allowed on the basis of initial reports from the Achille Lauro's captain that none of the more than 500 passengers and crewmen aboard had been harmed by the terrorists.

The strong administration reaction to the Egyptian decision and apparent Italian assent to freeing the terrorists underscored the widely divergent policies toward dealing with terrorism even among the United States' closest Arab and Western European allies.

Speakes said that from the outset Washington had made clear to Egypt and Italy its opposition to any negotiations with the terrorists "and our expectation that the terrorists would be apprehended, prosecuted and punished."

"We were consulted about the arrangements for ending the crisis and . . . we advised strongly against the release of the terrorists or concessions to them," he said. "We do not have a final resolution of what the Egyptians intend to do."

Speakes and Assistant Secretary of State Richard Murphy, who also gave a briefing on the hijacking last night, said it was not clear whether Egypt and Italy knew at the time of their negotiations with the terrorists that a passenger had been killed. But Murphy said it was his impression Egypt had agreed to grant safe passage to the terrorists on the understanding that no one had been harmed.

Throughout yesterday there was scant administration praise for Egypt, despite its efforts to arrange a resolution to the crisis without bloodshed.

Murphy said he thought the fact the terrorists saw no prospect of gaining the release of the 50 Palestinians imprisoned in Israel, whose freedom they had demanded, played an important factor and suggested that the U.S. and Israeli policy of refusing to make concessions to terrorists had paid off.

Murphy and Speakes said it remained "uncertain" what role the Palestine Liberation Organization, led by Yasser Arafat, had played in planning the hijacking or in persuading the terrorists to give up.

The four have been identified as belonging to the Palestine Liberation Front, but this group has splintered into two factions, one pro-Arafat and based with him in Tunis and the other anti-Arafat and based in Damascus.

Israeli Foreign Ministewr Ytzhak Shamir, at a news conference here yesterday, said Israel felt that it was "outrageous that such criminals, after killing innocent people, escape any punishment."

Meanwhile, Defense Department officials remained tight-lipped about possible military retaliation for Klinghoffer's murder. Officials said normal Navy operations had resumed in the Mediterranean.