JERUSALEM, MAY 24 -- Israel said today that it would defy any move by the United Nations Security Council to post observers in the occupied West Bank and Gaza Strip after an outbreak of violence set off by a mass slaying of Palestinian workers by an Israeli gunman.

A U.S. pledge this week to consider such an observer mission after Sunday's shooting, in which seven Palestinian workers from the Gaza Strip were killed, has signaled a worsening of U.S.-Israeli relations, Israeli government officials said.

Appearing on Israeli television tonight, acting Prime Minister Yitzhak Shamir said, "I don't assume the Security Council would decide" on such a step "since it would clearly know this decision would not be implemented, as many other U.N. decisions against Israel."

At a press conference earlier, Foreign Minister Moshe Arens said Israel was counting on U.S. support at a special Security Council meeting Friday in Geneva that was called to discuss the recent violence in the occupied territories. Palestine Liberation Organization Chairman Yasser Arafat is to appear at the meeting.

Arens conceded that coordination between the United States and Israel has "not been as close as it had been in the past." Relations between the Bush administration and Shamir's government have steadily deteriorated in the 10 weeks since Shamir refused to go along with a U.S. plan to set up Israeli-Palestinian talks.

Arafat is expected to propose that the Security Council dispatch U.N. observers to the West Bank and Gaza Strip as a way of protecting the 1.7 million Palestinians living under Israeli occupation there. More than 700 Palestinians have been killed by the army and by Israeli civilians during a 2 1/2-year uprising against Israeli rule in the occupied territories, including at least 23 who died in the mass slaying and subsequent wave of violent demonstrations this week.

Israeli officials noted today that proposals for an observer force frequently have been advanced in the United Nations by the PLO or Arab states, but always have been opposed by Israel and the United States. On Wednesday, however, U.S. Secretary of States James A. Baker III said the Bush administration "would be prepared to discuss the question of a U.N. observer team if that indeed comes up at the U.N. Security Council session."

In Washington today, State Department spokeswoman Margaret Tutwiler said the United States is prepared to discuss dispatching a U.N. observer team "to check on the situation" but would oppose a permanent observer force. "The United States' position on permanent observers is that we have always opposed that in the past, and there has been no change in our position," she said.

In response to Baker's statement, Arens said today that Israel expects the United States to veto any such resolution.

"Israel would not accept U.N. observers on territory under Israeli control," Arens said. "We feel there is no justification for the stationing of U.N. observers in areas . . . that came under Israeli control as a result of Arab aggression in 1967."

Government officials said today that in private contacts in Washington, the United States had assured Israel that it had not decided to support any plan for U.N. observers and was not sure such a proposal would be presented in Geneva by Arafat.

At the same time, officials said they believed Baker's statement was another sign of mounting tension between the Bush administration and Shamir, who has shifted Israeli policies to the right as he works to establish a new coalition with religious and nationalist parties.

"I think maybe the U.S. is trying to tickle us because they think we're misbehaving," said an aide to Shamir. "But we are not misbehaving and I hope this is not a serious statement by the secretary of state."

Labor Party leader Shimon Peres, who left the government after the collapse of the U.S. diplomatic initiative in March, said Israel's isolation going into the Geneva meeting was nearly unprecedented. "The question is not one act or another by the United States," he said on Israel radio. "The question is the deterioration in relations between us and the United States that is getting stronger."

Peres said that at a meeting of the Socialist International in Cairo this week, anti-Israeli feeling was running high even among traditionally friendly socialist parties from Scandinavia and Western Europe. Israel has been strongly criticized by European countries this week for its handling of the recent protests.

Arens bristled at comments by President Bush calling for restraint by Israeli troops and suggesting that the violence was connected to the stalemate in the peace process. The government's position is that the violence was caused by an isolated act by a "deranged" gunman and that it has been cynically exploited by the PLO and Arab states to criticize Israel.

The army today lifted curfews in the West Bank that had been maintained since Sunday to dampen the wave of demonstrations. However, refugee camps and towns in the Gaza Strip, where the protests have been particularly heavy, remained under curfew.

Army and hospital sources reported two more deaths in the demonstrations, including that of an 8-year-old boy who was reported shot in the head in the Gaza village of Bani Suheila Wednesday night.