August 1, 1981

Federal air traffic controllers threatened today to begin a nationwide strike Monday morning if the Government does not offer an acceptable new contract. They demanded benefits beyond those in a $40 million package worked out in June and then rejected by union members. Transportation Secretary Drew Lewis said it was ''unfair and unreasonable'' to give the Government just three days to meet the new demands. He asked for a week's postponement of the deadline for the threatened walkout, which would be illegal under Federal laws in any case.

Poland's Prime Minister shuffled his Cabinet today, dropping his deputy, who was in charge of economic affairs, and naming two more generals to Cabinet posts. At the same time, Parliament enacted a law to preserve and govern press and cultural freedoms achieved over the last year during nationwide labor and social unrest. Shortly before the nearly unanimous vote on the bill, about 300 workers in overalls and hard hats demonstrated at the doorway of the white stone Parliament building, demanding higher monthly meat rations. Prime Minister Wojciech Jaruzelski's Cabinet shakeup, which had been expected, was partly explained by a recent decision to separate Government and Communist Party responsibilities.

Amid growing controversy, an American director is preparing a production of a passion play, the first to be staged in Israel for large audiences. Traditionally, Jews have viewed passion plays, which depict the last days in the life of Jesus, as anti-Semitic because they tend to blame Jews for the death of Jesus. The Passion Play of Oberammergau, in West Germany, staged at mostly 10-year intervals since 1643, was rewritten last year to remove anti-Semitic references. The Passion Play of Jerusalem, as it is called, will open Sunday and is intended for Christian pilgrims. Francisco de Araujo, a director who has founded several choral societies in Washington, is staging the production on the grounds of St. Pierre in Gallicantu, a church on the slopes of Mount Zion.

The House voted today, 404 to 20, to preserve the Social Security minimum benefit for the two million retired people it now protects, rejecting President Reagan's recommendation that the floor be abolished. The legislation went to the Senate, where action was put off until Congress returns from its summer recess in September. A number of senators of both parties favor retaining the minimum benefit, but the House bill may be pigeonholed in favor of broader action. Although Congress has expressed general disapproval of Mr. Reagan's proposals to reduce Social Security benefits in several symbolic votes, this was the first time either house had defeated one of the Administration's measures outright.

Seven weeks after it started, baseball's longest strike ended shortly before 6 A.M. yesterday, and the major league teams and players immediately began preparing to resume the season with the All-Star Game Aug. 9 in Cleveland. Negotiators for the two sides not only settled their differences over free-agent compensation, the issue that forced the work stoppage, but also lengthened their collective bargaining agreement to insure an additional year of labor peace. The strike, which began June 12, cost the players an estimated $28 million in salaries. Based on average ticket prices and concession sales, the clubs' losses for the 713 canceled games would be about $116 million. But the teams had strike insurance, which will pay benefits totaling $44 million, leaving a net of $72 million in lost revenue.

'AMENITIES' By EDWARD A. GARGAN Governor Carey and Mayor Koch agreed yesterday on a plan to build the Westway, which the state calls the most ambitious and complex highway project ever undertaken in New York. The agreement by the two Democratic leaders after 10 years of wrangling between the city and the state es- Text of the agreement, page 30. tablished the highway project as ''the official policy'' for the replacement of the West Side Highway between the Battery and 42d Street in Manhattan. The accord was reached three days before a deadline for an application for Federal funds to purchase the right of way this year. It provides that if the Federal Government eliminates financing for landfill, parklands and other ''amenities'' from the project, the Governor and Mayor, who said his ''own personal preference is not Westway,'' could seek a trade-in of Federal Westway funds for use for mass transit.

Archbishop Avelar Brandao, the Roman Catholic primate of Brazil, has offered to mediate a 32-year feud between two rural families that has accounted for six new murders in the last month and a half. All told, nearly 30 people have died in the feud in the rural town of Exu. The most recent victims were two young members of the Alencar family, gunned down in their car in the state capital of Recife, and a 31-year-old farmer from the other feuding family who was shot while moving away from Exu to escape the violence.

Nearly one week after a municipal force of several thousand began smashing their huts and plastic tents and driving them out into monsoon rains, the sidewalk dwellers are drifting back to stake out their bits of pavement along a busy thoroughfare in the central Bombay neighborhood of Dadar. So far, only one family has found the courage to construct a shelter of tar paper and plastic along the one-mile stretch. The rest of the thousands who are coming back are camping in the open with the pots and pans and cloth they were able to rescue in the raid, an attempt by the authorities to force them out of the street. Some of the returned sidewalk dwellers are sleeping in train stations or with friends whose huts were saved from demolition by a last-minute court order. But in the daytime they come back to occupy the few square feet of pavement that for many had been their home for as long as 25 years. The demolition plan was postponed until mid-October, when the monsoon rains are expected to end.

The United States and India today agreed to hold at least one more series of talks on their differences over American nuclear fuel shipments. There were indications that both sides were eager to liquidate a disputed agreement on nuclear cooperation in the most amicable way possible. As negotiators for both countries announced that a third session would be held soon in Washington, the spokesman for the Indian Foreign Ministry hinted broadly that what was being discussed were the details for scuttling the 18-year-old agreement, which provided for the shipment of enriched uranium to a power plant in Tarapur. ''The question of resumption of supplies was not raised by either side,'' J.N. Dixit, the ministry spokesman, said in describing the two days of discussions.

A seventh nationalist prisoner died in the Irish hunger strike early this morning, just hours after one of his fellow hunger strikers had begun receiving medical treatment, presumably including nourishment, at the request of his family. The man who died was 25-year-old Kevin Lynch, who had been fasting since May 23 in the demand for political status for imprisoned nationalists. ''Kevin Lynch, a prisoner in Her Majesty's Prison Maze, died today at 1 A.M.,'' the British Government announcement said. ''He took his own life by refusing food and medical attention for 70 days.''

Encircled leftist rebels in Gambia's capital city threatened to execute Cabinet ministers and the President's former wife today unless troops from neighboring Senegal withdraw from the tiny West African nation and end their attempt to crush the rebellion. The insurgents claimed to have seized power in Gambia yesterday, while President Dawda Kairaba Jawara was in London for the royal wedding. In broadcasts on the Government radio in Banjul, the capital, they proclaimed a ''dictatorship of the proletariat.'' But early today the Government of Senegal airlifted an undetermined number of its troops into Gambia to try to put down the rebellion.

West Africa, July 30 - The commander of South African forces in this disupted territory said today that their assaults into southern Angola this month had shattered the command structure of two of the three regional headquarters of the insurgent South-West Africa People's Organization and forced the insurgents to regroup 30 to 35 miles from the border. Maj. Gen. Charles Lloyd denied reports from the Angolan capital of Luanda that his troops had occupied seven small towns in the region, but he said that strikes across the border against insurgent bases were ''a continual process.'' ''We are going across and coming back,'' he said. ''We don't occupy towns.''