Egyptian President Hosni Mubarak was true to his populist image last night: He wore his businessman's blue suit to a fancy black-tie White House dinner, the style of which has become a trademark of the Reagan administration.

Mubarak also maintained his political independence throughout the evening. During the traditional toasts, he urged a role for the Palestinians in the Middle East peace process, as he had done earlier in the day in his meetings with President Reagan.

"The United States can make a great contribution to peace by promoting a meaningful and unconditional dialogue between Israel and all Arab parties willing to negotiate," Mubarak said.

"No party should be excluded from this process. A first step in this direction is an American dialogue with the Palestinians. This would encourage moderation and rekindle the spark of hope in the hearts of millions."

After dinner the president drank coffee in the Blue Room and responded to Mubarak's plea on the PLO. "It depends on whether they meet the terms we've always laid out for them," he said. "We would love for them to meet the terms." The United States has insisted that the PLO recognize Israel's right to exist before any negotiations take place.

"As far as the PLO is concerned, they know it's necessary to recognize Israel," said Secretary of State Alexander Haig, a few minutes later.

Sen. Mark Hatfield (R-Ore.) called the Palestinians "a vital part of the whole process." He said "we should recognize anyone who wants to talk peace . . . a Palestinian spokesman, not necessarily Arafat."

The Reagans had Mubarak, his wife, Suzan, and about 120 government officials, socialites, industrialists and select friends for supreme of chicken and chocolate mousse.

They dined on the Reagans' new $209,508 china. And in his toast, Mubarak called the dinnerware "very elegant," Secretary of State Alexander Haig thought it was "impressive," and when the president was told that it is a Greek custom to break china, he looked shocked.

"Well, they'll never be invited," he joked, "or we'll just use the old china."

It was Mubarak's first visit to the United States since he succeeded the assassinated Anwar Sadat in October.

The evening was the end of a day of official talks in which Mubarak emphasized the need for the United States to recognize the PLO, as Sadat urged Reagan last August. The visit was also simply a chance for the two leaders to get acquainted over Mideast policy.

Presidential counselor Edwin Meese said the talks went "very well," adding, "Let me say that I don't think there will be any change in our position" on PLO.

The evening began wet and misty, with the formally clad Reagans greeting the Mubaraks at the North Portico. Nancy Reagan wore a scarlet taffeta dress by Bill Blass, with large puffed sleeves and a drop waist. A double strand of pearls hung loosely around her neck. Her jade and pearl earrings sparkled.

Suzan Mubarak wore a black and gold chiffon long dress, and President Mubarak a conservative navy suit, white shirt and navy dotted tie.

Since Mubarak's election, great attention has been drawn to his populist demeanor in contrast with Sadat's somewhat regal style of dress, travel and way of life.

In a White House briefing Monday a senior administration official said, "Mubarak has already adopted a very different overall leadership policy, emphasizing personal modesty . . .

"It's a statement of fact," said the official when questioned. "If you take a look at the style that President Mubarak has affected, it's not an attempt to compare him with anyone but just to state that Mubarak is this way. He lives quietly, his family is not front and center -- these are deliberate decisions on his part."

However, while Mubarak's personal style may differ dramatically from that of Sadat, observers say politically they are walking the same line.

Show business was noticeably absent among last night's guests, compared with some previous dinners. The only representatives of the performing arts were violinist Itzhak Perlman, who provided the entertainment for the evening, and Metropolitan Opera star Rise Stevens.

From California came producer of the "Tonight" show Freddie de Cordova, who also has another claim to fame.

"Freddie directed me in 'Bedtime for Bonzo,' " said the president, motioning de Cordova to come over.

And how was the president to direct, asked a reporter.

"He was as he is as president," said de Cordova. "Outstanding."

"And so was the chimpanzee," piped up Reagan, who said he had been telling his tablemates about Bonzo and Freddie. "Freddie would yell 'Cut' and then walk over to Bonzo and say, 'Look, Bonzo, I want you to . . .' and then he'd realize he was talking to a chimpanzee." The president hit himself on the side of his head the way he said Freddie used to do.

Vice President Bush said he had "recovered" from his brick scare this week. "It was a non-incident that got escalated for no reason," said Bush. "Someone heard it on the police radio and did what they were supposed to do, but it was really nothing."

"Socialite Joanne Herring added a touch of glamor to the evening. Her platinum hair swept up in curls, she wore a low-cut black velvet dress and gleaming diamond earrings that resembled small chandeliers.

"Jimmy Baker and I grew up together, and he is my most treasured friend," she said when asked of her Reagan connection. "I guess the Reagans must have known I needed cheering up," she said, referring to the recent death of her husband. "It was lovely of them to invite me. Tomorrow I have to rush back to Houston to meet Princess Margaret. It's such an exciting week."

In the traditional exchange of gifts, Mrs. Reagan gave Mrs. Mubarak a Boehm porcelain "Nancy Reagan rose." Reagan gave Mubarak a signed edition of the book "Washington the Capital," leatherbound with a gold-leaf presidential seal; a signed photograph of Reagan in a silver frame; and a cedar-lined humidor with a brass plaque engraved to Mubarak and filled with handmade cigars. From both the Reagans to both the Mubaraks: a jar of jellybeans.

The only gift that's still a secret is what Nancy Reagan is giving the president for his 71st birthday Saturday.

"For so long we've been giving each other joint practical holiday gifts, like hydraulic log splitters," said the president of one of his gifts to Mrs. Reagan.

"After 30 years it gets down to that," joked back Mrs. Reagan.

"But if you think about sitting in front of the fire after splitting the logs," said Reagan, "it's really a great gift."

When the Marine Band played "Shall We Dance," the First Couple spun around the floor a few times and then waved goodnight.