The administration, working through Egyptian President Hosni Mubarak, has informed Palestine Liberation Organization Chairman Yasser Arafat that President Bush will resume immediately the suspended U.S. dialogue with the PLO if Arafat accepts a U.S.-Egyptian plan to discipline the perpetrators of a May 30 Palestinian attack against Israel, diplomatic sources said yesterday.

The sources said the initiative is being pursued under tight secrecy because of fears that premature disclosure would expose it to attack from Arab radicals who believe the PLO should concentrate on armed struggle rather than negotiation in seeking to advance Palestinian claims to a homeland. The sources added that fear of a power struggle within the PLO leadership that could turn it toward hard-liners advocating violent solutions was a major factor in the administration's decision to actively try to help PLO moderates revive the dialogue.

Until now, the administration has given no sign that it had taken the initiative with active, behind-the-scenes diplomacy that could expose it to charges by Israel and its supporters in Congress and the American Jewish community of what one source called "a tilt toward the Arab side of the Middle East conflict."

However, the sources said, the administration believes it can defend its latest proposal as consistent with its insistence that the PLO must condemn the raid and back it up with disciplinary action against those responsible. Although the sources were able to provide only the broad outlines, the proposal they described appears to restate the original U.S. demands in a slightly softened version that would make it more palatable for the PLO to accept.

The sources said that the key part of the proposal calls for the PLO to punish the Palestine Liberation Front (PLF), a radical PLO faction that asserted responsibility for the abortive May 30 raid on a beach near Tel Aviv, by dropping its leader, Abul Abbas, from the PLO executive committee. That has been a U.S. demand from the outset.

It also would require the PLO to criticize the PLF's role in the May 30 incident and to reduce the PLF's status inside the PLO by taking away some of the rights and powers normally held by the various factions under the PLO umbrella. One of the original U.S. conditions for opening the dialogue was that any PLO faction involved in terrorism should be expelled, but Washington has not been explicit about the punishment it believes should be administered to the PLF.

According to the sources, Mubarak and his foreign minister, Esmat Abdel-Meguid, are trying to persuade Arafat to accept the U.S.-Egyptian terms for resuming talks and have been authorized by Washington to assure Arafat that if he does, Bush is prepared to restart the dialogue immediately.

The Egyptians reportedly are telling Arafat that the PLO cannot afford to cut off its only avenue of communication with the United States at a time when the administration is preparing to explore anew the chances for restarting the Mideast peace process. Instead, the Egyptians are telling Arafat, he should be positioning the PLO to exploit the tensions looming in U.S.-Israeli relations because of resistance by Israeli Prime Minister Yitzhak Shamir's rightist government to U.S. ideas about peace talks.

Bush suspended the 18-month-old dialogue on June 20 after the United States had waited three weeks for the PLO to take action against Abbas after the Israelis intercepted two speedboats filled with armed Palestinians apparently seeking to attack Israeli civilian beachgoers. However, Arafat did not specifically condemn the attack and said that he lacked the power to expel Abbas from the PLO executive committee.

Bush said he was left with no choice because the attack violated the strictures against terrorism laid down by the United States when it opened the dialogue in December 1988. But Bush made clear that he was acting reluctantly and would be prepared to resume the talks if the PLO "resolves problems associated with terrorist acts."

Secretary of State James A. Baker III, while acquiescing in the decision, warned that it almost certainly would set back the peace process because it is "quite unlikely" that any Palestinians in Israeli-occupied territories would engage in independent talks with Israel "unless there is at least a tacit acquiescence by the PLO." Baker is known to believe that the dialogue conducted by Robert Pelletreau, the U.S. ambassador to Tunisia, has been the best channel for persuading the PLO to acquiesce.

The sources said that the administration's desire to keep the channel open caused Bush to telephone Mubarak on June 23 and urge him to keep playing his role as the chief go-between outside the Tunis dialogue between the United States and Arafat. Mubarak sent Abdel-Meguid and his foreign policy adviser, Osama Al Baz, here on June 27, and they worked out the proposals in consultation with Baker and the administration's Middle East policy planners.

The idea, the sources said, was to devise a formula that would meet the U.S. insistence on assurances that the PLO is serious about honoring Arafat's 1988 commitment to renounce terrorism but that would not confront Arafat with major resistance from other PLO leaders.

Abbas has said publicly that he is willing to leave the executive committee. In addition, the PLF's calls for continued armed struggle against Israel are at odds with the PLO's current majority position of seeking to win an independent Palestinian state through negotiations, and the Egyptians reportedly believe that Abbas will not fight moves to reduce the PLF's status in an organization where its influence already is minimal.