July 27, 1989

LEAD: For the first time, the Palestine Liberation Organization has offered a specific list of conditions under which it might allow Israel's plan for elections in the occupied territories to go forward, Government officials said today.

LEAD: First it was classes in how to be civil to passengers. Then it was a dress code. Now the Taxi Commission has come up with a new innovation: teaching prospective cabbies how to find their way around New York City by making them ride a sightseeing bus for eight hours.

LEAD: SOMETHING is happening in sophisticated decorating circles. Although traditional rooms continue to be de rigueur - after all, they are what decorating with antiques is all about - the new look in traditional rooms is far from old-fashioned.

LEAD: Economy

LEAD: President Wojciech Jaruzelski has told Solidarity that he cannot allow it to form a government because Poland's Communist neighbors ''would look at this askance,'' a Solidarity official who attended talks with him said today.

LEAD: New complaints of misconduct within the Internal Revenue Service emerged today as I.R.S. agents described to Congress purported abuses that included nepotism, acceptance of gratuities, reprisals against whistle blowers and irregular use of Government travel funds.

LEAD: Calling the bureaucracy that runs the New York City schools unworkable, the New York State education commissioner said today that it should be dismantled and replaced by up to 60 autonomous school districts.

LEAD: Private employers in Canada's largest province are scrambling to comply with ground-breaking legislation requiring that the pay in jobs historically held by women match the pay for jobs of comparable skill that are usually done by men. In the public sector, the law has already produced substantial raises for women in secretarial and clerical jobs.

LEAD: For six days, this Mohawk reservation has been sealed off to outsiders by the New York state police. Inside, the self-styled Mohawk Sovereignty Security Force, rifles in hand, has enforced a crude form of law and order.

LEAD: In the first formal debate in the mayoral campaign, the incumbent, Edward I. Koch, faced persistent assertions yesterday that his administration had ''run out of gas'' and was ill prepared to face the future.

LEAD: Two years and three months after it began, the celebrated McMartin preschool child molesting case is teetering on the brink of mistrial with only one of six alternate jurors left - to many, a glistening example of the legal system run amok.

LEAD: The stock market surged in late trading yesterday on renewed hopes that the Federal Reserve is again easing credit. The Standard & Poor's 500-stock index and the New York Stock Exchange composite average reached new peaks, closing above the records they had set in 1987.