JERUSALEM, JAN. 9 -- Just when it was supposedly running out of steam, the wave of violence that has swept over Israel's occupied territories for the last month gained new momentum and a new rallying cry this past week. And it acquired in the process a new look of permanence that poses a grave challenge to the divided coalition government here.

Lines have hardened inside both the government and its Palestinian opposition and the narrow middle ground between them has been eroded further. Meanwhile, the rioting and the government's tough response are claiming a new victim -- Israel's international standing, which had been rising steadily in recent years and now has begun to plunge again.

The state's response has been a return to the tough stance that marked the first weeks of the violence. Troops are directly confronting rioters and opening fire in heavily populated refugee camps in the Gaza Strip. Dozens of alleged ringleaders have been placed under administrative detention or, in the case of nine activists, marked for expulsion.

Soldiers are forcing merchants to open their shops and defy calls for a general strike. They frequently order journalists out of the camps during disorders in what looks increasingly like a de facto ban on press coverage.

So far none of this has seemed effective in stopping the rioters. The reason, critics contend, is because none of it speaks to the grievances that sparked the riots -- the powerlessness, poverty and despair that pervade the occupied territories, especially Gaza. Those grievances, government officials conceded, ultimately can only be addressed through political negotiations.

But the coalition government, lurching fitfully toward elections in November, is deeply divided over whom to talk to, what to talk about and in what forum.

It also cannot agree on the nature of the problem. Prime Minister Yitzhak Shamir and Defense Minister Yitzhak Rabin define the violence in pure law-and-order terms as a struggle between terrorists and the state and give repeated assurances that, as Shamir put it Thursday, "a situation like this cannot continue for a long time."

Foreign Minister Shimon Peres, in contrast, talks about the urgent need for a political solution. But he has adopted a low profile until the rioting ceases for fear of being painted by his rivals as soft on lawbreakers. And so, lacking a coherent political strategy, the government has fallen back on military tactics.

The measures taken by the Army to quell the violence "have become the only strategy," said Zeev Schiff, a respected author and commentator on defense issues here. "It's like giving aspirin to someone who suffers from cancer. You get about 20 minutes of relief and that's all."

A week ago things looked like they were coming under control. Palestinians were tired of the violence, military officials said, and the Army began releasing some of the 1,900 persons arrested during the rioting and reducing the size of its forces in Gaza and the West Bank.

Then the government overplayed its hand. Last Sunday morning an Israeli soldier shot dead a Palestinian woman, a bystander, in an Arab suburb of Jerusalem, the first shooting death in nearly two weeks. That could be ascribed to bad luck, but an hour or so later the state announced it was expelling the nine activists. That move, critics said, was bad timing.

Suddenly Arab demonstrators had a new victim to mourn and new political martyrs to celebrate. By themselves, none of the nine activists boasts a territory-wide following, but the hometowns of each were hit by rioting.

In the Gaza Strip, home of four of the deportees, three of whom are associated with Islamic fundamentalist movements, hundreds of followers hit the streets each day, challenging the soldiers directly. By tonight, at least four more Gazans had been killed and 24 wounded by gunshots, bringing the casualties in a month of violence to at least 27 Palestinian dead and more than 200 wounded.

Behind the Israeli decision to expel the activists, insiders said, was a combination of security and political motives. Israeli leaders, especially Rabin, reportedly believe that expulsions are an effective deterrent that frightens the local population because no one wants to face the prospect of permanent exile.

At the same time, however, Israel found itself trapped in a political game of expectations. Officials had threatened earlier to expel dozens of activists, statements that had impelled the United States to warn publicly that such measures would violate international law and the Fourth Geneva Convention.

The leadership then faced a dilemma. If the state backed down, it was argued, Palestinians would see the move as a sign of weakness and believe they could use U.S. pressure to defeat Israel. And so the government's Big Three -- Shamir, Peres and Rabin -- met last weekend and decided on what they thought was a compromise: to expel nine, a minimal number in their eyes, but enough to send the message to both Washington and Gaza that Israel was a sovereign state determined to protect its security as it saw best.

It did not work. Besides setting off a new round of violence, the expulsions produced a new U.N. Security Council resolution condemning Israeli policy, one the United States felt compelled to vote in favor of. It was the first time the Reagan administration had endorsed a resolution attacking Israel since a 1982 vote condemning the Israeli siege of Beirut.

One of the great accomplishments of the Peres-Shamir government of national unity has been the upgrading of Israel's international image. Diplomatic relations have been forged with Spain and restored with several African states. Several East Bloc nations have exchanged interest sections and consulates with Israel.

Even at the United Nations, where attacking Israel was once a favorite pastime, the number of Security Council sessions devoted to Israel has dropped from a high of 50 in 1982 to only one last year, according to Benjamin Netanyahu, Israel's ambassador.

Now the tables may be turning again. U.S. and Israeli officials were quick to play down the significance of the American vote for Israel-American relations. But in the rest of the world, Israel's standing is beginning to decline again because it is using measures -- live ammunition against rioters, expulsions, administrative detentions, summary military trials -- that are not deemed acceptable for a nation that considers itself a western-style democracy.

"We've seen this movie before and it may be a very long winter," said a senior Foreign Ministry official. "But we're in a trap. If we try to be nice and go soft, we'll have world approval but total chaos in Gaza. If we're tough, then we lose world support. Either way, we lose."

A particularly important problem is the lack of an organized leadership in Gaza and the West Bank with whom Israeli officials can talk. Officials have always refused to negotiate with the outlawed Palestine Liberation Organization, and now the PLO's influence appears to be on the wane.

Palestinian moderates are in hiding, stunned by their own lack of influence over recent events. The few who have tried to assert leadership by calling for a nonviolent campaign of popular resistance have been threatened with arrest.

"The fact is that there are no leaders in this uprising," said Hijazi Burbar, an Islamic prayer leader and activist in Gaza City. "This is a revolt of people on every street corner and in every quarter of Gaza."

There is no one to talk to any more in the Gaza Strip, no one who speaks for the mob and no one, apparently, who could call a truce even if they wanted to.

"I don't think Israel is holding Gaza any more," said social scientist Meron Benvenisti. "I think Gaza is holding Israel."