HEBRON, WEST BANK -- Swaying and creaking with strain, a broad passenger bus in scratched red and white paint lumbers through the narrow, dusty lanes of this Palestinian town, threading between old stone walls and twisting alleyways that are the natural cover of stonethrowers.

Commuter Bus 160 of Israel's Egged cooperative is making its regular run between the shopping malls and office towers of Jewish West Jerusalem and the Arab market of Hebron, following the ancient road through the heart of the Judean hills in the occupied West Bank. It bears the Jewish settlers and soldiers trying to enforce Israeli rule in the territory, and, as the Arab uprising stretches through its third summer, it has become the latest test of strength between the Army and Palestinian militants.

For nearly 31 months, Palestinian youths have pounded this bus with rocks and bottles, hurled iron bars through its windows and dropped small boulders on its roof. In the early months of the uprising, known in Arabic as the intifada, Bus 160 rarely finished its one-hour journey from Jerusalem to Hebron without losing a window, and its drivers and passengers were regularly injured.

Now, with the intifada at a sustained lull in much of the occupied territories, the army has redeployed forces from quiescent villages and refugee camps to the Jerusalem-Hebron road and two other central commuter routes, and is making a concerted effort to lift the mobile siege on Bus 160 and others like it. Under the defense minister of the new right-wing government, Moshe Arens, the army has set a goal that it could never afford to contemplate until now: restoring a semblance of normalcy to daily life for both the 80,000 Jewish settlers in the territories and the 1.7 million Palestinians.

"Of course, the intifada isn't over, but we think the atmosphere has changed in the last year," said a senior Defense Ministry official. "The aims of the Palestinians haven't changed, but they are a lot more tired than they were. So even if we can't get back politically to where we were before the intifada started, we think a lot of people are anxious to get back to normal life."

If Bus 160 is the barometer of normalcy, Israeli forces still have a job to do. Though the army says attacks along the road are down, regular commuters say stones are still a regular hazard, and shattered windows remain a common sight on the six vehicles on the route.

One somnolent late afternoon last week, a rush-hour run of the 160 made the trip from Jerusalem to Hebron unscathed, but on the way back, in Bethlehem, a huge stone crunched into the bus's upper frame, apparently dropped from a rooftop within a few hundred yards of an army base.

Still, by most measures violence in the West Bank and Gaza Strip is at its lowest ebb since the intifada erupted in December 1987. June's monthly tally of eight Palestinians killed in clashes with the army was the lowest since the intifada began; this month, only one Arab has died so far in a protest action. In the Gaza Strip, where the uprising began, no one has been killed by the army since late May, though a number of persons were wounded in demonstrations last week.

By now, nearly 1,000 persons have died in the intifada, including at least 920 Palestinians, but the proportion of those killed in violence within the Palestinian community is growing. Even as deaths in Israeli-Arab clashes have dropped off in the last seven weeks, at least two dozen Palestinians have been slain by other Arabs because of accusations that they collaborated with Israeli authorities or because of feuding between rival groups. Overall, at least 230 persons have died in intra-Arab violence, mostly in the last year.

In part, the respite in Israeli-inflicted deaths appears to be the result of a deliberate new effort by the army to avoid conflict with Palestinian militants and exercise greater restraint when clashes occur. Defense Ministry officials confirm Palestinian accounts that soldiers have all but withdrawn from such militant but isolated areas as Rafah, near the Egyptian border in the Gaza Strip, and West Bank villages away from the main roads. "If we don't have to go to these places, and they remain quiet, we won't," an official said.

Palestinian journalists tell stories of Israeli patrols that have refrained from opening fire and retreated after being ambushed with stones, encounters that in the past often led to fatalities. The only Palestinian death this month, and the most violent clashes in June, involved not the army but the domestic Border Police, and occurred in Jerusalem, which has provided the only exception to the general calm.

Stone-throwing incidents still occur around the territories every day, and Palestinians have generally continued to adhere to the nonviolent measures of the intifada, such as the daily half-day commercial strike, occasional full-day strikes and a boycott of Israeli goods. Still, some Palestinian observers say the new army tactics may have helped inaugurate a new era of the revolt, when periods of outward tranquility alternate with spasms of mass protest and violence. The example was set in May, when a surge of unrest followed the slaying of Palestinian workers by a gun-wielding Israeli in the town of Rishon Lezion.

Rather than initiating a revival of the intifada, as many Palestinians hoped, the mass protests of May expired as if the effort of mounting them had finally exhausted a long-suffering population.

"Now we are living in a situation that looks quiet but can explode at any moment," said Saeb Erakat, a prominent Palestinian journalist and political activist from Jericho.

Israeli officials say they have taken a number of steps to make it easier for Palestinians to return to normal life and are planning more. Among other things, authorities have reopened several college campuses in the West Bank after a three-year interruption of higher education and have eased controls on Arabs crossing between the West Bank and Jordan. Officials say they are considering initiatives to relax the quasi-punitive bureaucratic procedures now imposed on Palestinian businessmen and taxpayers to clear the way for easier export of Palestinian goods to Israel and abroad.

Palestinian spokesmen say that some of these measures are little more than public relations gambits designed to improve Israel's image abroad while making no real concessions.

For example, while announcing that they would allow the reopening this month of the An-Najar college in Nablus, authorities delivered a letter to the college setting out highly restrictive conditions that would in practice block the renewal of classes. Most disturbingly for the Palestinians, the college was told that all of its students and professors from Jerusalem would have to obtain permits to teach and study in Nablus, a regulation apparently intended to force acknowledgement of Israel's claim of sovereignty over East Jerusalem.

Israeli officials themselves acknowledge that their entire liberalization strategy could be exploded by a single major act of violence on either side, a spark that would likely renew mass unrest and raise pressure in Israel for a new military crackdown.

For now, the foot soldiers of both sides are passing the long summer days in a contest of wills, image and prestige over the buses and other Israeli vehicles that travel the West Bank's three main arteries, running south to Hebron, north to Nablus, and east to Jericho. Determined to defy the stepped-up security and puncture the government's public promise to clean up the roads, Palestinian militants claim they recently scored one notable success: As he rode out to visit a Jewish settlement, they say, Arens's car was stoned.

As often happens, however, Israel won the contest of images. News of the incident was censored from Jerusalem's Arab-language newspapers.