VERONA, Italy (AP) _ Italian police said Wednesday a self-proclaimed PLO official arrested last week may have been planning to free four Palestinians accused of hijacking the Achille Lauro cruise ship.

Police officials, speaking on condition of anonymity, said their suspicion was based on wire taps and weeks of following the man, identified as Omar Sadat Salem Abdel Fatah and the holder of a Jordanian passport. They refused to elaborate, except to say he was in a maximum security prison in northern Italy.

Mario Giulio Schinaia, the deputy prosecutor of Verona who is leading the investigation into the Oct. 7 hijacking off the Egyptian coast, refused to confirm the police reports.

''On the basis of wire-tapping we were aware he was preparing something and police had to arrest him. I cannot give further information, however,'' Schinaia told The Associated Press in a telephone interview.

The Italian news agency AGI said police in Genoa, where the probe of the Achille Lauro hijacking is based, went to the prison where the hijack suspects are being held to show them a photograph of the man.

Police arrested the man in a house near Verona last Thursday after uncovering explosives, submachine guns, pistols and detonators in the building. They charged him with illegal possession of arms and explosives.

He told police he was an official of the Palestine Liberation Organization headed by Yasser Arafat, and that the arms were intended for use against ''Syrian objectives in Holland.''

Police officials said they did not believe his story. There are several U.S. And NATO military bases near Verona.

Police said they had determined the man was in Italy when the Achille Lauro was commandeered, and that he later met in Yugoslavia with Mohammed Abbas, leader of the Palestine Liberation Front, a faction of the PLO.

Abbas was aboard an Egyptian jetliner carrying the hijackers that U.S. warplanes forced down in Sicily. U.S. Officials asked that Abbas be arrested on a charge of masterminding the hijacking, but Italian authorities let him leave for Yugoslavia, saying they had no evidence to hold him.

However, a Genoa prosecutor later issued an arrest warrant for Abbas, charging him with planning the piracy.