JERUSALEM, AUG. 2 -- The Israeli government urged Western nations today to apply strong economic and diplomatic sanctions against Iraq, and warned that Israel would not tolerate any movement of Iraqi troops into neighboring Jordan.

Defense Minister Moshe Arens told Israel radio that concerted Western sanctions could stop Iraqi leader Saddam Hussein "dead in his tracks," making military action unnecessary. At the same time, Arens and other Israeli leaders compared today's Iraqi invasion of Kuwait to Nazi Germany's aggression in the 1930s.

"Iraq will be looking around for other targets, not just Israel," Arens said. He added that Saddam "represents a danger to the entire world, not just Israel."

Israeli officials said the movement of Iraqi troops into Kuwait did not in itself threaten the Jewish state and would not provoke any military reponse by Israel. "Kuwait is a long way away," one official said.

However, Arens and other official sources declared that Israel would regard any move by Iraq to advance forces into Jordan, Israel's neighbor and an Iraqi ally, as a step that could provoke an Israeli military strike. "We will not permit the entry of Iraqi troops into Jordan," Arens said. "This has been a longstanding Israeli policy."

Israeli officials have been reluctant to spell out what Iraqi moves would be considered a provocation to war, despite a recent flurry of bellicose rhetoric between the two countries. Arens's statement appeared to reflect a judgment that Israel's posture in the wake of the Kuwait invasion must be made clear to Saddam.

The defense minister's statement was accompanied by assertions from government officials that the invasion proved that Iraq, and not Israel, was the source of tension in the Middle East. Officials said the crisis should result in an easing of U.S. pressure on Israel to begin negotiations with Palestinians in the occupied territories, and revive Israel's role as a "strategic partner" to Washington in the Middle East.

"If there is a danger to the stability in the Middle East, it is not our conflict with the Palestinians," said Avi Pazner, a senior adviser to Prime Minister Yitzhak Shamir.

The invasion occurred one week before a much anticipated meeting in Washington between Secretary of State James A. Baker III and Israeli Foreign Minister David Levy. Baker had been expected to press for answers on Israel's willingness to meet with a Palestinian delegation in Cairo and implement Shamir's own plan for elections in the occupied territories.

Following today's events, an official source said, Levy would press Baker "about what is the use of talking about pressure {on Israel} when the real sources of tension are on the other side of the Middle East map."

Israeli officials said that while the Defense Ministry here had been in touch with Pentagon officials in Washington about the Iraqi attack, the two countries were not coordinating any action on the invasion.

At the same time, several official spokesmen and analysts said the Iraqi move might revitalize Washington's perception of Israel as a strategic ally, an image that has faded in recent months with the decline of U.S.-Soviet tensions in the Middle East as elsewhere in the world.