Palestinian guerrilla leader Mohammed Abu Abbas says Washington has abandoned its efforts to arrest him for allegedly masterminding the October 1985 hijacking of an Italian cruise ship in which an American was killed.

In a rare interview Sunday, Abbas told United Press International that the Oct. 7, 1985, hijacking of the Italian luxury liner Achille Lauro received undue world attention. Leon Klinghoffer, a wheelchair-bound American, was shot in the head and dumped overboard during the two-day hostage ordeal off the coast of Egypt.After the Achille Lauro hijacking the Reagan administration dubbed Abbas, until then a little-known member of the Palestine Liberation Organization, the world's most wanted terrorist and offered $250,000 for his arrest.

The Justice Department issued an arrest warrant for Abbas as the mastermind of the hijacking but dropped charges on Nov. 9, 1987, citing lack of evidence.

"The Americans announced officially that they no longer are planning to capture me," Abbas said. "They announced one year ago that they do not have sufficient proof that I had committed any offense."

But U.S. officials still hold Abbas responsible for masterminding the hijacking and have said they would like to see him brought to justice.

A State Department official Sunday said the appearance of Abbas in the front row of the Palestine National Council's meeting in Algiers indicates the PLO has refused to renounce terrorism. He said key department officials found it "disappointing" that Abbas was playing a prominent role at the Palestinian parliament-in-exile.

"The exclusion of Abbas, who is a thug, would have been a gesture to us that the PLO is moving away from terrorism," said the official, who monitors developments in the Middle East. "But his presence shows they are not serious about disavowing such violence."

Abbas leads the Palestine Liberation Front, a PLO faction. He was re-elected to the PLO's executive committee at the most recent PNC meeting in April 1987, when he received an ovation. PLO officials said the popular Abbas was removed from the governing body in a public-relations gesture following the hijacking.

"Everyone knows that American opinion tries to support our enemy and seeks to provoke fights against us," said the Syrian-born Abbas, 39. "It is our right from God and humanity to fight the enemy that occupies our territories, but at the same time we do not accept involving innocent people."

In November 1985, U.S. fighter jets forced down an Egyptian airplane carrying the Achille Lauro hijackers together with Abbas. The plane landed in Sicily, where the hijackers were arrested and later prosecuted by Italian authorities.

But with the assistance of his Iraqi diplomatic passport and wearing an EgyptAir uniform, Abbas escaped from Rome to Yugoslavia, on to South Yemen and then back to his headquarters in the Iraqi capital of Baghdad.