Authorities closed all three high schools in the central Illinois city of Decatur today to defuse a confrontation with Jesse L. Jackson and his supporters over the expulsion of seven black students for fighting at a football game.

Meeting with school officials in day-long negotiations mediated by Gov. George Ryan (R), Jackson, founder of the Rainbow/PUSH Coalition and a onetime presidential candidate, demanded the students' reinstatement and an easing of "zero tolerance" policies against student violence, which he said were inappropriate for the Sept. 17 incident in the stadium stands.

The students were expelled for up to two years, with a review set for the end of this school year.

After hearing from Jackson at an emergency meeting, the school board agreed tonight to reduce the expulsions, allowing the students to attend a regional alternative school for a year, then return to their school.

Jackson, who had suggested probation of at least six months and other conditions for the students' immediate return, rejected the compromise and vowed to lead students in another march on the school Tuesday.

The school superintendent said he would decide Tuesday morning whether to reopen the schools, warning that trespassers would be arrested.

During a break in negotiations earlier in the day, Jackson said in a telephone interview from Decatur that the expulsions were "an abuse of authority" by the board. "The zero-tolerance policy is ill-defined and arbitrary, and in this case excessive for a dubious infraction," which he called nothing more than "a simple fistfight."

He said that if the school board did not reinstate the students, Rainbow/PUSH would file suit this week challenging use of school zero-tolerance policies against even minor security infractions. Coalition officials said that a lawsuit would contend such policies violate the due process clause of the 14th Amendment.

School authorities closed Decatur's high schools after Jackson, leading about 1,000 protesters at a demonstration Sunday in a school parking lot, said he would escort the expelled students to classes and challenge the school board "with our bodies on the line." He also urged parents to keep their children out of school until the board reversed its decision.

School Board President Jackie Goetter dismissed Jackson's contention that the incident was merely a fistfight. She said the lives of more than 100 people had been endangered by a "mob action" and that the school closings today were "in the best interests of the remaining students."

Jackson said the students could have been punished with after-school detention or other action that would not effectively end their hopes for an education and have serious lifelong repercussions.

He said the students had been expelled for a fight in which no weapons were involved, while other students have received lesser punishments for bomb threats or threatening to assault teachers.

While Jackson emphasized from the start that the dispute was about "fairness" and not race, some of the protesters Sunday and at a smaller demonstration at Eisenhower High today noted that all of the board members who voted to expel the students were white and the only dissenting vote was from a black member, Jeffrey Perkins, who contended that school officials were too quick to equate rowdy behavior by black youths with gang activity. The school district is 60 percent white and 39 percent black.

One of the expelled students, senior Greg Howell, today apologized, saying: "We're sorry for what we did at the game. We made a mistake; we never had a chance to apologize . . . and we want to apologize and keep it from happening again."

CAPTION: Jesse L. Jackson links arms with expelled student Roosevelt Fuller, second from right, during march to Eisenhower High School in Decatur, Ill.