The State Department, reacting to reports that it will close the Palestine Liberation Organization information offices here and in New York, said yesterday that no decision has been made.

Department officials, while acknowledging that the matter remains under review, said it is untrue that a decision has been made in principle or that Deputy Secretary John C. Whitehead approved a closure recommendation last week during the absence of Secretary George P. Shultz.

However, the officials acknowledged, as one put it, that "the decision process is moving in the direction of closing the PLO offices." They said that, while Shultz is reluctant to offend Arab governments, such an action probably will be necessary to stave off harsher congressional restrictions that would force the government to expel the PLO observer at the United Nations.

The legislation, sponsored by Senate Minority Leader Robert J. Dole (R-Kan.) and Rep. Jack Kemp (R-N.Y.), both contenders for the Republican presidential nomination, would declare the PLO to be a terrorist organization.

Israeli Ambassador Moshe Arad, speaking yesterday at the National Press Club, said his country would welcome any steps taken to reduce the ability of the PLO offices to encourage support for terrorism.

Clovis Maksoud, the Arab League representative here, said such a step would harm America's standing in Arab countries. He urged the administration to make an independent judgment rather than "an instant and mechanical response to the Israeli lobby."