The Reagan administration publicly appealed to Israel again yesterday to end its use of lethal force to put down violent Palestinian demonstrations in the West Bank and Gaza, but Israel termed U.S. declarations and diplomatic actions "unfortunate" and misdirected.

The State Department called for an end to violence and urged improved living conditions for the Palestinians.

"Order should be maintained without the use of lethal force. Techniques are available to accomplish this, and we urge they be employed," the department said in a statement drawn up after telephone consultations between officials here and vacationing Secretary of State George P. Shultz.

The statement, read by spokeswoman Phyllis Oakley, was the main U.S. effort of the day, at least in public. Twenty-two Palestinians have been killed in the two weeks of riots and disturbances that have swept the occupied Arab territories.

Israeli Ambassador to the United States Moshe Arad, in an interview with Washington Post editors and reporters shortly before the State Department declaration was released, called criticism of Israel from the White House Tuesday "unfortunate" and applied the same term to the U.S. abstention the same day from the voting on a U.N. Security Council resolution deploring Israeli policies in the territories.

The U.S. abstention at the United Nations permitted the resolution to be passed. Had the United States strongly opposed the measure, it could have exercised its right of veto.

Arad, who quarreled with the U.S. assessment of blame on both Israel and the rioting Palestinians, echoed an Israeli Foreign Ministry statement in Jerusalem that there is "no foundation or justification for blaming Israel about the recent serious and unfortunate events."

The Israeli statement rejected the White House and State Department remarks of Tuesday on grounds that they equated "those who disturb the peace and commit acts of violence" with "responsible authorities whose efforts are directed to the maintenance of order and normality," Washington Post correspondent Glenn Frankel reported.

Prime Minister Yitzhak Shamir, appearing on Israel Television, sought to play down the dispute with the White House.

"I admire President Reagan and I will always thank the United States for what they have done for us," Shamir said. "Even with one's best friend, there are sometimes differences of opinion . . . . I think that we're right and not the government of the United States. We will convince them and we will overcome these differences."

Avi Pazner, Shamir's media adviser, called the U.S. abstention in the Security Council vote "an annoying event," but said it was not unexpected. "We got bad treatment on American television and this is the inevitable result," Pazner said.

Arad said the U.S. abstention at the United Nations "doesn't send the right message to those who were responsible for the incidents" on the West Bank and in the Gaza Strip, saying that the U.N. vote might encourage such people.

Nevertheless, the ambassador said, U.S.-Israeli friendship is strong enough to withstand these differences. He said he did not believe the U.S. statements and actions of recent days go beyond "a slap on the wrist" for Israel.

Arad disputed U.S. suggestions, which were reiterated in yesterday's statement, that Israel should employ less forceful riot-control techniques. "You will not find support in Israel for establishment of a major police riot force," said Arad. He maintained that establishing such a force is "against all our concepts" and gave no encouragement to proposals that the Israeli methods of dealing with disorders and demonstrations be changed.

State Department sources said diplomatic discussions with Israel continue, and that the messages in private are essentially the same as those being announced publicly.

The U.S. assessment is that for the time being, Israel is likely to control the situation through the use of police power and force, officials said. But the concern in the administration is that the respite will be only temporary without alleviation of conditions in the occupied territories or movement toward resolution of the Palestinian issue in the currently deadlocked Israeli-Arab peace process.

Unless such basic changes occur, a State Department official said, the administration fears that disorders may soon resume more violently than ever, with serious impact in Israel, in Israeli-Arab relations and, ultimately, on U.S. official and public attitudes toward Israel.