The retired Israeli general arrested for allegedly conspiring to sell $2 billion in American weapons to Iran said yesterday that Israel's defense establishment knew of his actions, and he threatened to cooperate with U.S. authorities unless his country intercedes.

Meanwhile, a U.S. official said the general, Avraham Bar-Am, was the No. 2 officer in the Northern Army Command in Israel in 1982, when that command was mainly responsible for the invasion of southern Lebanon.

Before his retirement in 1984, the official said, Bar-Am was chief of staff of the Israeli Defense Forces manpower branch but resigned amid allegations of improper conduct involving promotion practices and distribution of weapons to personal friends. Court papers say he has continued to serve as an adviser to the Northern Army Command.

The Associated Press reported from Jerusalem that the daily newpaper Davar reached Bar-Am by telephone in Bermuda, where he is in custody. "The defense establishment knows about this group, of which I was an adviser," Davar quoted Bar-Am as saying. "And if the state of Israel does not help us, I won't sit here for a month for nothing. I'll give myself up to the United States."

United Press International quoted Bar-Am as saying on Israeli radio: "What we tried to sell was the state's equipment. Let's say there are many people involved in this deal, and in all of this we are only a small part." The broadcast said Bar-Am had a letter from Defense Minister Yitzhak Rabin authorizing him to engage in arms sales but not specifically permitting sales to Iran.

A federal official said Bar-Am's first phone call from jail was to the Israeli defense attache here. A criminal information filed Tuesday in federal court in Manhattan charged Bar-Am and 16 others with conspiring to buy U.S. arms from other countries and sell them, in violation of an embargo, to Iran. At least nine of the suspects have been arrested.

The Israeli Defense Ministry, after denying that the scheme was government-sanctioned, later said its director general, Menachem Meron, had questioned again every official who could have authorized such an operation. "Israel had no direct, indirect or tacit connection with the matter, and the individuals acted on their own," the ministry said.

The Israeli Embassy here was closed yesterday for the Passover holiday, and diplomatic officials could not be reached for comment. Embassy spokesman Yossi Gal said Tuesday, "The government of Israel has no connection or involvement with the matter."

The schemes, as described in court papers in New York, included five separate conspiracies, one involving the planned sale of $800 million worth of American missiles, helicopters, tanks and fighter jets that have been delivered to Israel.

Meanwhile, U.S. law enforcement sources maintained that there was circumstantial evidence that the Israeli government may have known of the plot.

The sources said the defendants involved in the Israeli end of the conspiracy told undercover agents that "Israeli agents" advised them "not to enter the United States because it [the conspiracy] was illegal." Also, the sources said, the defendants claimed that they had used the Israeli intelligence service Mossad to check the backgrounds of some of the other conspirators.

One official added that the defendants could not have sold Israeli-owned arms without the government's knowledge. "It's impossible to plan to take that volume and ship it to Iran without someone in authority knowing," he said.

Besides Bar-Am, those indicted were two Israelis, four Americans, four West Germans, two Greeks, a Frenchman, a Briton and two men of unknown nationality.

The court documents charge that one of the conspiracies involved Israelis Guri Eisenberg and Israel Eisenberg who planned to ship arms to Iran through their firm, B.I.T. Co. Ltd., based in Israel.

Iran has been at war with Iraq for nearly six years. Under Shah Mohammad Reza Pahlavi, Iran bought more than $18 billion worth of U.S. arms in the 1970s, but the Carter administration halted the exports after American hostages were seized in 1979.

Meanwhile, Iran denied yesterday that it had tried to buy $2 billion worth of American-made weapons through illegal channels.

The official Islamic Republic News Agency, monitored in Nicosia, Cyprus, said the charges were a "hasty scenario by ruling groups in America" intended to cover up Washington's failure to bring down the Libyan government of Col. Muammar Qaddafi.Staff writers Jonathan Randal and John M. Goshko contributed to this report.