The Major League Baseball Players Association tonight proposed submitting the issue in the players' strike to final and binding arbitration. The owners rejected the suggestion about three hours later, leaving the future of the negotiations and the future of the baseball season in jeopardy.

The development came at the end of the 35th day of the strike and another day of futile negotiations in which both sides made and rejected proposals.

In making the announcement of the players' decision, which came after the owners had left the Doral Inn, Marvin Miller, executive director of the players association, conceded that "arbitration is a crap shoot," but added, "the events of today and yesterday were the convincers. This is not going to be resolved by collective bargaining."

Now that the owners have made it clear that the issue won't be resolved by binding arbitration either, the prospects for a quick settlement, any settlement, grow dimmer.

Federal mediator Kenneth E. Mofett informed Secretary of Labor Raymond Donovan of the players' proposal before the owners rejected it. Moffett said that Donovan was going to invite Miller and Ray Grebey, the owners' chief negotiator, to meet with him Friday in Washington.

After hearing of the owners' decision, Don Fehr, the general counsel of the players association, said, "Apparently, they're not interested in a settlement because there is no other avenue open to us. They are very insecure about their ability to convince a third party of their position. I venture to say they would have had no problem with it if they thought they could win."

Dick Moss, a consulting attorney for the players association, said, "I thought the majority wanted a solution. Either I was wrong or the club owners weren't consulted."

In a prepared statement released to the press, Grebey reiterated management's opposition to binding arbitration. "It is surprising that the spokesman for the players union should seek to make proposals to the press long after the close of the bargaining session," Grebey said. "This announcement is obviously designed as a public relations ploys in an effort to avoid resolving the issue of compensation in negotiation."

Moffett has urged the parties to consider binding arbitration. Edward Bennett Williams, owner of the Baltimore Orioles, has made the same suggestion. Asked tonight if his position on the issue had changed, Williams said, "It has not."

George Steinbrenner, the owner of the Yankees, said he had no comment at this time.

Jerry Reinsdorf, a co-owner of the Chicago White Sox, said he might have been in favor of arbitration three weeks ago, but not any longer. "I think it is very clever in terms of when he (Miller) timed it," Reinsdorf said. "He negotiated until Ray gave him his bottom-line offer. I do not believe the players have yet come to their bottom line."

Often, Reinsdorf said, an arbitrator will split the difference between the two parties in attempting to find the solution. So, Reinsdorf said, "The players would have gotten more than they would have gotten through negotiation."

Moss said, "if Reinsdorf represents their reaction, they can forget the season. They can forget baseball."

Doug DeCinces, the American League representatives, said the suggestion to go to arbitration "came from the players. We went around and around, talking about the pluses and the minuses . . . We honestly believe they don't want to negotiate. We're at the point of no return. What's the difference, we're looking at the end of the season anyway if they turn it down."

Although knowledgable sources say that while the players had clearly hoped the idea would be accepted, they did not expect it to be. The consensus was that it was a shrewd move by the players who would succeed, if all else failed, in looking "like heroes," while the owners appeared the opposite in spurning the offer.

The question is: where do the shambles of the negotiations go from here? The owners today made what Grebey called a "comprehensive" proposal, that placed a cap on the number of free agents requiring porfessional compensation: eight this year and 10 thereafter with a provision that four more could be added in 1983 if there were less than 10 the year before. They adjusted the level of compensation so that now in the majority of cases where professional compensation is required the team signing the free agent could protect 25 men on its roster. But they also proposed that the players would not receive major league service credit for the period of the strike preceding today's date.

Miller rejected the proposal, stating unequivocally that the players would not settle without a guarantee of full service credit for the entire length of the strike. Miller said, "It was an issue raised to prevent a settlement."

During the afternoon session, the players made a counterproposal, also rejected, which placed a maximum on the number of free agents requiring professional compensation each year at seven with no carry-over provision. They also said they were willing to negotiate on the numbers of free agents requiring professional compensation within the framework of Moffett's proposal, if the owners would agree that there be some teams to which a free agent could sell himself for the same amount of compensation now enforced (an amateur draft pick) or no compensation at all.

Asked why the owners had raised the issue at this time, Grebey said, "At this point in the strike, all the issues ought to be on the table."

There is another possibility: that the owners raised the issue as part of their proposal in order to trade it for further concessions on compensation or other related issues. They could, Miller said, be "holding the issue hostage, using it for what they can get for it."

But, Miller pointed out, the players already had offered to trade a withdrawal of the unfair labor practice suit with the National Labor Relations Board (one of the conditions of the owners' proposal) for service credit.

Asked whether there were other concessions he would be willing to trade concerning compensation, Miller said, "No."

Moffett said at the lunch break that if the talks broke off he thought the "next move would be to Washington" where the negotiations might be able to continue outside of the "goldfish bowl in which they have existed."