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U.S. Secretary of State George Shultz, on his final day in the Middle East, found his peace mission caught Monday between hardening public positions by Arabs and Israelis.

Jordan appeared to be setting new conditions for peace talks with Israel, and there were moves in Israel by members of the hawkish Likud bloc to derail Shultz`s diplomatic initiative by calling early elections.

Shultz flew to Amman from Jerusalem for a second round of talks with Jordanian officials in preparation for a crucial meeting in London on Tuesday with Jordan`s King Hussein, whose support is vital for the American peacemaking effort. Hussein reportedly is in London for dental surgery.

A senior Jordanian official said Arab nations are setting proper conditions for peace talks with Israel as a result of the 11-week-old Palestinian uprising in the Israeli-occupied West Bank and Gaza Strip.

Jordan, for instance, appeared to be backing away from its earlier plan to have a joint Jordanian-Palestinian delegation go to the bargaining table.

That arrangement was intended to get around the U.S. and Israeli unwillingness to deal directly with the Palestine Liberation Organization, which they view as a terrorist group.

Jordan now says the PLO should be able to send its own delegation to represent the 1.5 million Palestinians in the occupied territories, according to the Jordanian official, who spoke with reporters on the condition he not be identified.

In Damascus, the official Syrian media criticized the new U.S. initiative a day after Shultz met there with President Hafez Assad.

And in Israel, an official in the Likud bloc, which is headed by Prime Minister Yitzhak Shamir, was quoted by Israel Radio as saying the Knesset

(parliament) will be dissolved and early elections called for July 26 if the U.S. pressures Israel to attend an international peace conference. Hussein demands such a conference, but the Likud fears that it could force a settlement on Israel.

Officials of the Labor Party, led by Foreign Minister Shimon Peres, who supports the U.S. peace plan, responded to the Likud by threatening to seek elections as early as May to avoid a prolonged period in which the government would be unable to deal with the peace issue. Elections are not required until late fall.

Shultz continued his shuttle diplomacy between Israel`s two rival leaders. He met separately Monday evening back in Jerusalem with Shamir and Peres to brief them on his talks in Amman with King Hussein`s brother, Crown Prince Hassan bin Talal, and with Prime Minister Zeid Rifai.

Contrary to the remarks by the Jordanian official, a senior American official said the talks in Amman had gone well.

He said U.S. officials are not aware that Jordan may no longer seek to arrange a joint Jordanian-Palestinian negotiating team. ”That has always been part of the concept and it still is,” the American said.

He added, ”We don`t see any sign that the Arab positions are hardening.”

Since Dec. 9, at least 70 Palestinians have been killed, most by gunfire, and hundreds have been injured in violent clashes with Israeli soldiers and settlers in the occupied territories.

To Arab leaders, the uprising is seen as strengthening the Palestinian bargaining position and putting Israel on the defensive. The Jordanian official said Israel`s standing in the world has been diminished by the way it has sought to put down the Palestinian protests.

In Israel, Shamir is determined not to make concessions now that would appear to be yielding to pressure from Palestinian rioters, according to one of his senior aides.

Movement toward peace negotiations, the aide said, should wait until calm is restored in the territories.

”Any sign of weakness or crumbling by Israel to this unrest will have fatal consequences to our state,” he said.

In five days of shuttle diplomacy among Israel, Jordan, Egypt and Syria, Shultz has received public support for his peace plan from only one Arab country, Egypt, and from the half of the Israeli government led by Peres.

American officials traveling with Shultz are saying little about the overall progress of his diplomatic initiative.

The officials said Shultz will most likely wait until after his talks with King Hussein Tuesday afternoon before deciding whether to make a second swing through the Middle East later this week, after the NATO summit in Brussels.

At each stop, Shultz has outlined the main elements in what is yet to become a formal American proposal. Basically, Shultz wants negotiations this spring to arrange for local elections and limited self-rule for Palestinians in the West Bank and Gaza, who have been under Israeli administration since 1967.

That interim measure is linked to the start later this year of Arab-Israeli negotiations on the final status of the territories. Those

negotiations would be based on the principle of land for peace

Shultz is willing to have the final-status negotiations open with an

”international event” to satisfy Hussein`s demands for a sign of international aproval. But Shultz opposes a full-fledged international conference whose members, including the Soviet Union, would have the power to impose a settlement on Israel.

In other developments:

– Israeli officials, stung by foreign television footage showing four soldiers beating two captive Palestinians, are considering banning journalists from areas of the West Bank and Gaza Strip. According to the New York Times, Shamir said Monday of calls to limit news coverage of the Palestinian protests: ”The question is one of usefulness and feasibility. The defense establishment has to look into the matter; and if it becomes clear that this could indeed reduce damage, I wouldn`t rule it out.”

– Two more Arabs died Monday as the violence continued. Soldiers fatally shot Yasser Daoud Eid, 18, of Burin, a village near Nablus, and Mahmoud Batwi of Jenin died in a hospital of bullet wounds received over the weekend.

– Israel Radio said leaflets purporting to contain a warning from Jewish settlers had been left in a number of Arab villages. The leaflets, in Arabic and Hebrew, were signed ”Jewish Citizens for the Land of Israel.”

The leaflets said, ”Jews will no longer turn the other cheek, and Jewish blood will not be forfeited.” They warned that Arabs were ”misreading” the situation if they thought the army was holding back out of weakness. And they threatened that if Israel withdraws from the territories, ”war will follow” and not a single Arab will remain in the areas.

Spokesmen for Jewish settlers on the West Bank attributed the leaflet to

”provocateurs.” But a senior army officer told reporters that violence by settlers constituted a problem. ”We find that most settlers do practice self- control, but some do not,” said the officer, who asked not to be identified.