JERUSALEM, JUNE 3 -- Israel said today that it will not halt the immigration of Soviet Jews to the occupied West Bank and Gaza Strip and suggested that a demand by Soviet President Mikhail Gorbachev for assurances against such settlement was a gesture to Arab states.

Following Gorbachev's suggestion at a news conference in Washington that Moscow might curtail the flow of Jewish emigrants to Israel if they continue to settle in the occupied lands, Israeli officials quickly reiterated the government's contention that only a fraction of the Soviet newcomers had chosen to move there.

However, they affirmed that acting Prime Minister Yitzhak Shamir has no intention of changing his policy under which the immigrants, now arriving at the rate of 2,500 a week, have "freedom of choice" to settle anywhere in Israel or Israeli-occupied territory.

"We do not have a policy of settling Jewish immigrants in Judea, Samaria and Gaza," said Avi Pazner, a senior adviser to Shamir, referring to the territories by their Biblical names. "We do not encourage them to settle there. The immigrants coming to Israel have full freedom of choice where they want to live, and it is a fact that less than a half of a percent chose to live in these areas.

"I think the Soviet Union does not know the facts and doesn't know that we are speaking here about a few hundred people," Pazner added. "If Gorbachev knew how few people are involved, he never would have raised this."

Despite the public criticism on the settlement issue from both Gorbachev and President Bush, Israeli officials muted their reaction here in an effort to head off a major diplomatic spat. Both Shamir and Foreign Minister Moshe Arens refrained from responding publicly to the remarks, and officials here said privately they thought Gorbachev was merely seeking to appease Arab states that have been campaigning to restrict Soviet migration to Israel.

However, one senior minister, Ehud Olmert, reacted sharply to the statements from Washington. "If President Gorbachev is looking for an excuse for a decision he has already made to stop immigration, then let's call his bluff," he told Israeli radio, "because he knows, and President Bush knows that we have no policy of settling Jews in Judea and Samaria and Gaza. I hope this statement is just lip service to appease the pressures coming from Arab countries."

Until now, officials here said, the Soviet government has steadily expanded the flow of Jews to Israel despite strong protests from the Arab world. The sole concession Moscow has withheld has been the opening of direct flights between Moscow and Tel Aviv, which were to begin this year but were halted when the issue of immigrants settling in the territories emerged in January.

Nonetheless, officials of the quasi-governmental Jewish Agency here said they will be able to transport up to 20,000 Soviet Jews to Israel each month beginning in July. Under recent agreements, they will be able to travel to Israel through Finland and Poland in addition to current transit points in Hungary and Romania, officials said.

Both the numbers of Jews settling in the occupied territories and the government incentives they receive have been matters of dispute between the United States and Israel. Although officials here contend that only a few hundred of the more than 40,000 Soviet Jews who have arrived here this year have joined Jewish settlements outside Israel's 1967 borders, the figures do not include thousands of immigrants who have moved to new Jewish neighborhoods in Arab East Jerusalem.

U.S. officials also have pointed out that the government continues to offer preferential terms on mortgages and other incentives to all settlers in the territories, including newly arrived Soviet Jews. In the three months since the collapse of the coalition between his right-wing Likud and the left-wing Labor Party, Shamir has set up two new Jewish communities in the territories and gotten parliamentary approval for more than $30 million in new funding for settlements.

Shamir today reaffirmed his intention to set up a new, "narrow" coalition government this week with religious and extreme nationalist parties. Unlike the centrist government it would replace, the new coalition would be firmly committed to expanding the Jewish population in the territories, where about 80,000 Jewish settlers live among 1.7 million Palestinians.

"The Arab states skillfully exploited the fact that a few hundred Soviet Jews want to live in these areas in order to mount a general offensive against the very fact of Jewish immigration from the Soviet Union," Pazner said.

He added that Israel "was grateful to see" a statement by Secretary of State James A. Baker III that reaffirmed U.S. support for Soviet immigration to Israel following Gorbachev's remark.

{In Washington, Arab League Ambassador Clovis Maksoud welcomed Gorbachev's warning about continued settlement of Soviet Jews in the occupied territories, adding that it "indicates an awareness of Arab concerns and anxieties."

{But he said Bush's statement reiterating U.S. opposition to "new" and "additional" settlements, while "relatively reassuring," was "inadequate because it does not denounce the existing settlements as illegal and because it perpetuates a loophole through which Israel can . . . expand existing settlements."}