Italian Prime Minister Bettino Craxi today denounced Libyan praise of Friday's terrorist attack at the airport here, saying "those who call the terrorist attack an act of heroism have unveiled a bloody and fanatic faith."

"There can be no heroism in a massacre of innocent civilians," Craxi added, calling for international action to oppose "states that allow terrorist groups to organize their bloody undertakings through tolerance or, even, support."

While the Socialist prime minister did not mention Libya by name, there was no doubt his statement was directed at the former Italian colony now ruled by Col. Muammar Qaddafi, a revolutionary long accused by western and Israeli intelligence agencies of supporting international terrorism.

Most Italian newspapers carried on their front pages today a Libyan statement issued yesterday terming the assaults on the Rome and Vienna airports "heroic." Eighteen persons were killed and more than 100 were injured in the apparently coordinated attacks.

Interior Minister Oscar Scalfaro, meanwhile, told a legislative committee that the attackers entered Italy and Austria by train from Switzerland, United Press International reported. He said new controls on foreigners would be introduced and security tightened at Leonardo da Vinci airport without hampering citizens' freedom of movement.

In an interview published yesterday, the chief of military intelligence, Adm. Fulvio Martini, said the assailants here had trained in Iran and had stopped in Damascus, Syria, en route to Europe.

Yesterday, the Libyan government's JANA news agency attacked Arab Tunisia, Egypt and Jordan for "condemning every heroic operation of the martyrs of Sabra-Shatila" refugee camps in Lebanon while "forgetting the Zionist massacres of the Palestinian population of these two camps."

JANA said "these audacious operations" -- presumably the attacks in Rome and Vienna -- "are a direct consequence of those massacres." Hundreds of camp residents were killed by Lebanese Christian militiamen following the 1982 Israeli invasion of Lebanon.

The lone survivor of the four terrorists in the attack here Friday, identified as Mohammed Sarham, 19, has told a judicial interrogator that he was born in the Sabra-Shatila complex that has been a traditional breeding ground of Palestinian guerrillas.

Craxi's statement came as Judge Domenico Sica, an expert on terrorism cases in Italy, interrogated the wounded Sarham for the third day.

Police sources said they have established the whereabouts of Sarham and one of his accomplices in Rome in the weeks before the attack, but the activities of the other two slain terrorists remained a mystery.

Sarham is not known to have talked about his accomplices, and their names and nationalities have yet to be established.

[Reuter quoted Italian officials as saying Sarham had declared that eight other guerrillas had been preparing to leave Beirut to carry out similar attacks on airports in Paris and Madrid.]

A note in Arabic found in Sarham's pocket identified their group as the "Martyrs of Palestine" and claimed the attack was, in part, a retaliation for the Israeli bombing Oct. 1 of the headquarters of Yasser Arafat's Palestinian Liberation Organization in Tunis.

The PLO has publicly condemned the Rome and Vienna attacks and stated that none of its members had anything to do with them. Israeli and western intelligence agencies have indicted that followers of Abu Nidal, a renegade Palestinian opposing Arafat, was responsible.

The family of the Rome attack's youngest victim, American Natasha Sophie Simpson, 11, buried her today with the blessing of Pope John Paul II. On three separate occasions since Friday, the pope has condemned the terrorist violence that took her life.

In a standing-room only service at the American Pontifical College just outside the Vatican, hundreds of Italians and Americans mourned the death of the daughter of The Asssociated Press news editor in Rome, Victor Simpson, and his wife Daniella, also a journalist.

In a bilingual mass officiated by Diarmuid Martin, an Irish Vatican official who often serves as a spokesman for the church, hundreds of fellow students from Rome's Marymount International School sang to the accompaniment of a schoolmate's guitar.

Natasha's father, who was injured in the assault, attended the funeral with his right arm in a sling. The Simpsons' 9-year-old son, Michael, was still recovering in a hospital after an operation for a blood clot. He apparently was trampled during the shootout at the airport. The family was scheduled to fly to New York on TWA for home leave.

The pope sent Archbishop Justin Regali to the funeral as a personal representative with a message of support for the family and a condemnation of the terrorism.

News services reported these developments:

In Athens, a deputy minister for public order, Thanassis Tsouras, said Greece canceled the flight to Cairo Saturday of three members of a PLO delegation after receiving a tip about possible violence at the Athens airport.

In Jerusalem, Prime Minister Shimon Peres briefed a parliamentary committee on the attacks, leading one deputy, a rabbi, to urge the slaying of Abu Nidal. Most committee members accepted the principle of reprisal against the renegade Palestinian, Israel Radio said.