WASHINGTON (AP) _ An Arab-American organization is planning weekend demonstrations to protest a decision by a novelty company to continue selling two Halloween masks the group finds offensive.

The American Arab Anti-Discrimination Committee said members would demonstrate at Spencer Gifts Inc. outlets because the company decided to put its ''Sheik'' and ''Arafat'' masks back on the market.

The Pleasantville, N.J.-based company had earlier this month withdrawn the masks for sale at its 435 outlets after a three-day protest and telephone campaign by the committee.

On Friday, Spencer general counsel Ronald Mangel said in a letter to AAADC spokesman Faris Bouhafa that the company decided to put the masks back on sale but would not reorder them for next year.

''The essence of Halloween is exaggeration,'' Mangel said earlier. ''It's not an ethnic mask, it's a character mask.''

In its Halloween catalog, Spencer urged customers to ''put on our Arafat mask and terrorize your friends.''

The Arab group characterized the ad as ''an exhortation that reinforces the negative and increasingly discredited stereotypical image of Palestinians as terrorists.''

--- Ex-Navy Procurement Official Given 18-Month Sentence

WASHINGTON (AP) - A former Navy procurement official has been sentenced to 18 months in prison for accepting $475,000 in bribes from two defense companies seeking inside information on lucrative contracts.

Garland L. Tomlin Jr., 60, was sentenced Friday on his guilty plea to conspiracy, receiving bribes and tax evasion by U.S. District Judge Claude Hilton in Alexandria, Va.

Tomlin could have received a 25-year sentence for taking $400,000 from Sperry Corp. and $75,000 from Honeywell Inc. in exchange for confidential information about a multimillion-dollar contract to maintain electronic components of naval weapons.

Tomlin pleaded guilty July 14 and has been cooperating with the Justice Department's continuing investigation of Pentagon procurement fraud, which is nicknamed ''Operation Ill Wind.''

--- NOW Sues Anti-Abortion Group to Keep Clinics from Being Blocked

WASHINGTON (AP) - The National Organization for Women is suing in an attempt to stop an anti-abortion group from blocking abortion clinics.

The organization alleges in a lawsuit filed in U.S. District Court on Friday that members of Operation Rescue plan to illegally harass and intimidate patients and employees at abortion clinic demonstrations scheduled to begin Nov. 10 in the Washington, D.C., area.

NOW seeks a preliminary injunction to prohibit ''trespassing on, sitting in, blocking, impeding or obstructing ... any facility'' offering abortions, family planning or gynecological services.

If a court order is issued, Operation Rescue will proceed with its plans, said members of the organization, an evangelical Christian group with an estimated 35,000 supporters that has demonstrated at abortion clinics around the country.

Joining NOW in the suit were Planned Parenthood of Metropolitan Washington and eight other groups, including the Virginia and Maryland state chapters of NOW and the Hillcrest and Commonwealth clinics.

--- House Democrats Stand by Star Wars Cuts

WASHINGTON (AP) - Some House Democrats are asking their colleagues to stand firm in negotiations with the Senate on a significant cut in the Strategic Defense Initiative as Congress moves toward completion of a $305 billion defense bill.

In a two-page letter to Rep. Les Aspin, D-Wis., chairman of the House Armed Services Committee, 16 Democratic members of the House said the spending level for Star Wars should be $3.28 billion, not the $3.55 billion congressional negotiators are considering.

The House in August approved $2.84 billion for the Pentagon's share of the program in its authorization bill; the Senate adopted a total of $4.3 billion in its authorization legislation.

House and Senate conferees on the defense bill for the fiscal year that began Oct. 1 are considering a compromise of $3.55 billion for the program.

Signing the letter released Friday were Reps. Charles Bennett of Florida; Patricia Schroeder of Colorado; Ronald Dellums, Vic Fazio and Howard Berman of California; Lane Evans of Illinois; George Hochbrueckner of New York; Joseph Brennan of Maine; Jim Olin of Virginia; Steny Hoyer of Maryland; Edward Markey and Barney Frank of Massachusetts; Martin Olav Sabo of Minnesota; Jim Moody of Wisconsin; Les AuCoin of Oregon and David Bonior of Michigan.

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WASHINGTON (AP) - Leaders of the country's oldest and largest Hispanic organization voted Friday to ''clean house'' after learning that $88,000 had been funneled through an undisclosed account, officials say.

The national executive board of directors of the League of United Latin American Citizens voted after a daylong closed meeting Friday to create a new foundation and strip the old foundation of its tax-exempt status, said Ruben Sandoval, special counsel to LULAC President Jose Garcia De Lara.

But the fight over the old foundation, managed by former presidents of LULAC to receive corporate donations for the group's charitable works, appears to have caused an angry rift among some members of the San Antonio, Texas- based organization of 140,000.

''It's bitterly divided, very bitterly,'' said Nelda Ojeda Savoy, president of a Washington, D.C., LULAC council. ''Texas has always tried to manipulate and control LULAC.''

De Lara initiated efforts to replace the foundation with a new entity after discovering in March a previously undisclosed account through which $88,000, most of it corporate donations, had been funneled, said Sandoval.