MIDEAST PEACE PARLEY. For divided Israeli Cabinet, breaking up is hard to do

Israel's ``national unity'' coalition government is so divided that it was unable to agree yesterday on breaking up. Wednesday's meeting, the second this week, of the 10-man ``inner Cabinet'' on Foreign Minister Shimon Peres's proposal for an international Mideast peace conference ended inconclusively.

Ministers of Mr. Peres's Labor Party lined up behind him, while members of Prime Minister Yitzhak Shamir's Likud bloc stood firmly against a conference. Mr. Shamir has opposed such a parley, arguing that it would force Israel into unacceptable territorial concessions.

Expecting a 5-5 stalemate, Peres did not even bring his proposal to a vote, and called on Shamir to agree on elections to decide the issue.

Shamir objected and told Peres that since the Cabinet had ended its debate without approving his plan, Peres had no mandate to pursue an international conference on behalf of the government.

But the foreign minister told reporters after the meeting that he was still free to work for an international conference since the Cabinet had not voted against it. (Peres was scheduled to leave for the United States today for meetings with Secretary of State George Shultz and other Reagan administration officials.)

``The proper solution is to go to the people and seek a decision,'' Peres said. ``Any attempt to nullify this proposal stops the peace process.''

Peres rejected the idea of resigning from the Cabinet with ministers of his party, saying that he did not want to leave the government to Likud. Peres's withdrawal would leave the Cabinet intact and in the exclusive control of the Likud.

With the Cabinet stalemated, the battle over an international conference now moves to the Knesset, Israel's parliament, which alone has the power to call new elections.

Despite Peres's determination to go to the polls, the Labor Party has so far failed to put together a parliamentary majority in favor of new elections. The party announced yesterday that, while staying in the government, it would intensify its efforts to achieve a majority in the 120-seat house in favor of elections.

Likud has already begun working behind the scenes to prevent such a majority. Both Labor and Likud have focused efforts on smaller religious parties that have traditionally provided the swing vote between major political blocs.

The escalating rhetoric between Labor and the Likud bloc has already created an election-eve atmosphere.

In an unprecedented statement, the Labor Party yesterday called on Shamir to resign, criticizing his peformance as prime minister as well as his foreign policy. It charged that he was unable to run the government and was opposed to the peace process.

The Likud retorted that Labor's statement proved that it was using the international conference idea to topple the government and end Shamir's term as prime minister.

Observers say the acrimonious exchanges between the two parties have strained to the limit their ability to serve together in the Cabinet.

Though the government still technically exists, some political analysts say it can no longer function and that it is only a matter of time before Israelis go to the polls.