Stay on Book About Israeli Agents Upset : Censorship: Jerusalem argues that the work endangers its intelligence operatives. The publisher says it was being silenced by a foreign country.

Arguing that it was being muzzled by a foreign government, St. Martin’s Press on Thursday won an appeal overturning an injunction that had restrained the company from distributing a book purporting to expose the Mossad, Israel’s super-secret intelligence agency.

Issuing a brief ruling in the precedent-setting case, the Appellate Division of the New York Supreme Court dismissed a stay issued by a lower court judge Wednesday. The Israeli government had sought the stay on the grounds that publication of the book would endanger its intelligence operatives.

The book purports to name Mossad agents, and describes the intelligence agency’s alleged operations and training techniques.

It also contains the sensational charge that Israel knew in advance about a terrorist attack in Lebanon that killed 241 American servicemen in October, 1983, but withheld full information about the impending action because it wanted to poison relations between the United States and Arab nations. The Israeli government has vehemently denied the allegation.

The four-judge Appellate Division panel ruled that the Israeli government had failed to show that the book endangered the lives of its agents. The judges said the publisher already had shipped 17,000 copies of the book, including many newspaper review copies, and “any grant of injunctive relief in this case would be ineffective.”

The temporary injunction apparently was the first time that a foreign government has blocked, even briefly, distribution of published material in the United States. The Israeli government obtained a similar injunction that remains in force in Canada.

State Supreme Court Justice Michael J. Dontzin on Wednesday had ordered St. Martin’s Press to cease publication and distribution of the book, pending a hearing.

“This was a case of a foreign government reaching across our borders and telling Americans what they can read and what they can publish,” said Thomas McCormack, chief executive officer of St. Martin’s Press. “It is totally unacceptable and I am gratified they were stopped.”

McCormack said his company had received 50,000 orders for the book, “By Way of Deception: The Making and Unmaking of a Mossad Officer,” by former agent Victor Ostrovsky and Canadian journalist Claire Hoy. He said St. Martin’s had decided to print 100,000 copies.

In a telephone interview Thursday with the Washington Post, Ostrovsky said he has been in hiding in Canada to avoid being kidnaped and taken to Israel.

On Sept. 5, Ostrovsky said, two men he described as “ranking Mossad agents” appeared at his home and warned that, for his “own safety,” he should try to stop publication of the book. Since then, he said, he has lived like a fugitive, sleeping at a different place each night. “It’s scary,” he said.

McCormack said that “it is my understanding (the agents) did not threaten him. They tried to reason with him and perhaps tried to assure him if he abandoned this book, there would be no loss in income because of the decision. I was not told that any overt, any explicit threats were conveyed.”

John Lerner, a partner at the Manhattan law firm of Skadden, Arps, Slate, Meagher & Flom, which represented the Israeli government, said discussions were under way whether to appeal.

“The issue is whether a former employee of a foreign intelligence agency is going to be permitted to breach his contractual duties to a foreign government and inflict irreparable harm on employees of that government and whether that conduct will be restrained. There are names in the book,” he said.

The appellate decision “eviscerates protection that should be given to our secrets. What happens to a CIA agent breaching his duty who publishes in Israel? The hallmark of comity between the laws of various nations is reciprocity . . . .”

Israeli sources said Ostrovsky, 40, was born in Edmonton, Canada, and immigrated to Israel in the mid-1950s. He served in the military police and reached the rank of captain before joining the Israeli navy. He later served with the Mossad for two years before being dismissed as unreliable and returned to Canada.

Staff Writer William Tuohy in Jerusalem also contributed to this story.