The outline of Palestine Liberation Organization position on a Middle East peace settlement began to emerge today after a four-hour speech by chairman Yasser Arafat in which he did not rule out the possibility of negotiations with Israel.

Officially, the PLO has no position on attending a new Geneva peace conference because no such meeting has been called and no invitations issued.

Unofficially, the PLO has decided to participate it asked, recognizing that such a step implies at least tacit recognition of Israel. This position has been developed in five days of heated debate at the Palestine National Council meeting here. Tough talk against Israel and objections from hardliners at the meeting apparently failed to alter a situation forced on the Palestinian leadership by the determination of the major Arab powers to seek a settlement.

The conditions under which the PLO would participate in a Geneva conference were listed earlier this week by Farouk Kaddoumi, head of the PLO political department. These are that Palestine issue not be discussed except in the presence of the PLO, that the PLO be invited as an independent delegation, and that some framework other than U.N. Security Council Resolution 242 be the basis of the conference.That resolution calls for total Israeli withdrawal from the territories occupied in the 1967 war, but does not recognize Palestinian "rights."

At a frequently confusing briefing after Arafat's speech today, Mahmoud Labadi, the spokesman for the National Council, said Kaddoumi's conditions are subject to change and do not constitute official PLO policy. It became apparent, however, that this is because, in line with Arafat's speech, the PLO officially has no policy on Geneva.

To say that the Palestinians would go to Geneva and accept the creation of a Palestinian state alongside Israel is not to say that the Palestinians think such a conference is going to be held.

Many of the nearly 300 delegates to the national council have expressed doubt that a settlement is in the offing, given the adamant refusla of Israel to negotiate with the PLO and the apparent endorsement by President Carter of Israel-s demand for defensible frontiers, presumably beyond the 1967 lines.

In his speech today, Arafat was strongly critical of the United States for its support of Israel and said, "We don't believe, we are not hopeful, that there will be a Palestinian state."

Pursuing a theme expressed by several influential Palestinian leaders earlier, he said that another Middle East war might be necessary before a settlement could be achieved, citing reported statements to that effect by prominant Israelis.

Arafat, talking to reporters, welcomed the statement by Carter last night that there must be "a homeland for the Palestinian refugees." This, Arafat said, could be an "important step" that "touched the heart of the Middle East problem."

[Ghassan Tueni, a representative of the Arab League, said in a statement issued in Washington that he believes Carter is moving slowly, yet with great assurance" toward a settlement in the Middle East.]

Arafat's comments on Geneva reflected the tangle of pressures, both from the Arab countries and from factions within the PLO, through which the Palestinian leadership is picking its way.Arafat has promised nothing and committed himself to nothing but has not really excluded anything either.

Defending the PLO's contacts with some sympathetic Israelis against vehement criticism from delegates, Arafat said, "We want a democratic secular state in Palestine. So we are not against contacts with anybody who recognized the right of the Palestinian people to self-determination."

The "secular democratic state" that would replace the Jewish state of Israel has been the PLO's stated objective for years. The elimination of Israel, whose creation the Palestinians say was illegal, remains official policy and is unlikely to be changed at this conference.

Arafat also defended his decision to reopen friendly relations with King Hussein of Jordan, who has been the PLO's enemy since his troops drove Palestinian guerrillas out of his country six years ago.

Arafat said "we want to normalize relations with Jordan and open offices there."

There are an estimated one million Palestinians in Jordan, and Egypt's President Anwar Sadat has said that any Palestinian state should have a formal link or federal tie with the Amman government.