BEIRUT, Lebanon - Even as Israel raked Lebanon with new air attacks, the Lebanese government demanded changes yesterday in a U.S. plan to stop the fighting. Beirut said the proposal would perpetuate Israel's control of its southern region and violate the basic tenets of a Mideast peace settlement.

Israel bombarded Hezbollah targets across southern Lebanon for the seventh straight day, and Lebanese guerrillas sent rockets crashing down on northern Israel. Two people were killed and 17 were wounded in Lebanon, police reported.

Some 400,000 Lebanese have streamed out of southern communities to escape the fighting, and they are squeezed into relatives' houses, cars, and crowded school classrooms. At least 17,000 people have been evacuated from northern Israel.

The United States, Israel's main ally, and France, Lebanon's former colonial ruler, have been trying separately to broker an armistice. Neither proposal has been officially disclosed.

Lebanon's prime minister, Rafik Hariri, and foreign minister, Faris Bweiz, criticized the U.S. plan because it doesn't demand an immediate Israeli withdrawal from the enclave it controls in southern Lebanon.

Bweiz, in Cairo, Egypt, for an emergency meeting of Arab League foreign ministers, said he had demanded basic changes in the proposals and was waiting to hear from Washington.

The U.S. plan, he said, would undermine a 1978 U.N. Security Council resolution that demands an unconditional Israeli withdrawal from the 440-square-mile buffer zone Israel carved out of southern Lebanon in 1985 to block cross-border attacks. Hezbollah has been fighting for more than a decade to drive Israeli troops from the border zone.

Bweiz also said it contradicts the land-for-peace principle of the peace process launched in 1991.

Fighting raged yesterday, with fighter-bombers, helicopter gunships and artillery based in the Israeli-held enclave attacking guerrilla rocket launchers and hide-outs near the port city of Tyre and the market town of Nabatiyeh.

Two people were killed and 17 were wounded, including two U.N. peacekeepers caught in the cross fire in southern Lebanon, police reported. Also, two Nepalese soldiers were wounded in a guerrilla grenade attack.

The Iranian-backed Hezbollah fired three salvos of Katyusha rockets into northern Israel, wounding one person and damaging houses and cars.

In all, 48 people have been killed and 187 wounded in the fighting.

Civilians have been hit hardest: Thirty-nine of the dead were Lebanese civilians.

The Israelis launched their recent campaign to stop a series of recent Hezbollah attacks on northern Israel. But the offensive has only intensified the attacks, with the Israelis reporting more than 200 Katyushas fired in the past week.

Hezbollah says there are more to come.

Its Al-Manar television station broadcast warnings in Hebrew, Arabic and English telling Israelis to abandon homes in northern regions targeted for attack.

The only way for Israeli settlements to be secure ''is for our civilians - children, women, farmers - and villages to be safe from aggression,'' Hezbollah's leader, Sheik Hassan Nasrallah, declared.

Israeli officials said yesterday that the U.S. proposals include placing international monitors in the field and getting Syria, the dominant power in Lebanon, to guarantee any agreement to halt the fighting.

Israel would also be required to declare that it has no claims on any Lebanese territory and would be willing to withdraw its troops from the buffer zone on condition Hezbollah is disarmed and doesn't attack Israel for a fixed period.

Like the American proposal, the French plan reportedly is based on a 1993 verbal agreement under which both sides agreed to stop attacking civilians.

Still, Prime Minister Hariri noted, Beirut hasn't rejected either plan.

''We hope to see America and France cooperate together to make a joint proposal,'' he told a news conference after meeting in London with British Prime Minister John Major.

Two senior Israeli officials said Syria has been cool to the idea of a broad, new agreement and wants to restore the U.S.-brokered verbal understanding reached after a similar Israeli offensive against Hezbollah in July 1993.

Israeli Prime Minister Shimon Peres said yesterday that he wants a written agreement to end hostilities with Hezbollah.

''If we reach something reasonable, practical, we'll sign,'' he said while inspecting an army base in northern Israel.

An envoy from Iran, Hezbollah's main backer, signaled support for the French plan during a visit to Syria yesterday. But Foreign Ministry official Mohammed Kazem Khavansari dismissed the American proposals as ''negative.''