BEIRUT, Lebanon--Pro-Iranian Shiite Moslems claimed yesterday they had executed Lt. Col. William R. Higgins and released a videotape purporting to show the U.S. Marine hanging from a makeshift gallows.

They said the execution was carried out in retaliation for Israel's kidnapping of a Moslem cleric last week.

A typewritten statement in Arabic signed by the Organization of the Oppressed on Earth said the 44-year-old hostage was hanged at 3 p.m. (8 a.m. EDT). Both the tape and statement were delivered to a Western news agency an hour after the deadline.

The group had threatened to kill Higgins, calling him a "proven spy," if Sheik Abdul Karim Obeid were not freed. The influential Moslem cleric was kidnapped in a raid by Israeli commandos Friday.

The videotape showed a man the captors identified as Higgins dangling from a gallows with both his hands and feet tied by rope. Taken in two 15-second sequences, the victim wore a white blindfold in one and was shown without a blindfold in another, with his head tilted.

There was no way to verify immediately the Moslem group's claim and whether the purported hanging occurred yesterday. The 30-second videotape was of extremely poor quality, and there was no indication when it was made.

President Bush condemned the reported hanging and hurried back to Washington to meet with aides about a response to "this brutal murder."

"It is a most troubling and disturbing matter that has shocked the American people right to the core," Bush declared, though he cautioned that he had no confirmation Higgins had in fact been hanged. "There is no way that I can properly express the outrage that I feel," he said.

Higgins, of Danville, Ky., was serving as head of an observer group attached to the U.N. peacekeeping force in south Lebanon when he was seized February 17, 1988. His captors accused him of spying for the CIA.

A diplomatic source told The Associated Press the United Nations received unconfirmed reports that Higgins was shot to death after the shooting down of the Iranian airbus by the U.S.S. Vincennes on July 3, 1988. At the time, no specific date for the death was given.

From the Oval Office, Bush monitored reports and summoned top advisers, including Defense Secretary Dick Cheney, Deputy Secretary of State Lawrence Eagleburger and other Cabinet members, said Press Secretary Marlin Fitzwater.

Bush telephoned Secretary of State James A. Baker III as Baker landed in Shannon, Ireland, before his return to Washington late last night.

In Israel, officials repeated their offer to trade all the Shiites they hold from south Lebanon for three Israeli soldiers and all foreign hostages held in Lebanon.

Avi Pazner, spokesperson for Prime MinisterYitzhak Shamir, said yesterday Israel was awaitingclear evidence that Higgins was killed beforemaking official statements.

But he said the exchange offer stood.

The offer was made in Jerusalem earlieryesterday by Defense Minister Yitzhak Rabin, in anannouncement broadcast on state-run Israel radio.

Higgins' reported killing triggered an instantdebate in Congress over Israel's role in theevents.

"Perhaps a little more responsibility on behalfof the Israelis would be refreshing," said SenateGOP Leader Bob Dole (R-Kansas). But Rep. CharlesSchumer (D-N.Y.) countered that blaming Israelwould be "turning the world on its head."

At the White House, officials carefully avoideddirect criticism of Israel, but Fitzwater said,"It is fair to say that many people do share thesenator's concerns." He would not elaborate.

There are nine Americans in captivity in theMiddle East, including Terry Anderson, Middle Eastcorrespondent for The Associated Press.

Bush said, "Somehow there has got to be areturn to decency and honor, even in matters ofthis nature."

He also said he had spoken by telephone withHiggins' wife, "a wonderfully stoic individual whois going through sheer hell."

A sister of Higgins said she was in a state ofshock after the announcement yesterday.

"Yes, I've just spoken with the StateDepartment and I will not reveal what they said,"Mary Fischer said at her home in the Louisville,Ky., suburb of Okolona. "Right now, I'm in a stateof shock. I just don't know.