President Anwar Sadat delivered an historic address to the Knesset today and Israeli Prime Minister Menahem Begin later declared that the Egyptian leader's visit had laid. "the basic foundation for the establishment of peace."

Sadat, standing at the rostrum of Israel's Parliament offered the Jewish State complete acceptance to "live among us in fully security and safety."

He told Israel, however, that the price for a full peace was agreement by Jerusalem to withdraw to its pre-1967 borders and to creation of a Palestinian homeland.

In a joint broadcast tonight with CBS correspondent Walter Cronkie, whose separate interviews with the two leaders a week ago moved them a major step closer to this unprecedent visit, both Sadat and Begin voiced optimism that progress had been made.

"In such a rather short time, I read in the eyes and the hearts of all I met - achievement," Sadat declared.

"You can't solve all the problem in 24 hours," Begin added. But, he said, "They were good talks. We made progress. We understand each other better. We understand we should talk peace."

Sadat and Begin both pledged to continue their dialogue - with the Israeli leader expressing the hope he would now be invited to Cario.

The upbeat tone of their comments gave a lift to spirits that had been considerably dampened earlier in the day by the harsher declarations both leaders made in Knesset speeches.

Sadat, in his address to the Parliament, bluntly told Israel in a clear reference to its refusal to acknowledge the rights of the Palestinians that "no one can build his happiness at the expense and misery of others."

The Egyptian leader went on to warn that unless a Middle East settlement could be reached, both Israel and Egypt were perched on "the edge of a horrifying abyss and a terrifying disaster."

Begin, in his reply, stressed the persecution of Jews throughout history and the hostility of the Arabs toward Israel in modern times.

Declaring that Jews had a God given right to Palestine, he vowed that Israel would "never again put our people within the range for extermination."

While members of the Israeli Knesset warmly applauded the Egyptian leader both before and after his address, the two speeches had definitely dampened the euphoria that had existed here since Sadat arrived.

It became clear during private talks between Sadat and Begin earlier in the day, one Israeli Cabinet minister said, that the Egyptians were not going to be bought off with any offers of bilateral agreements, and that an effort would have to be made to find a formula to reconvene the Geneva peace conference.

Sadat was scheduled to hold additional talks with Israeli leaders before returning to Cairo Monday, and officials voiced hope that at the minimum, a breakthrough on arranging an early return to Geneva might be achieved before he leaves.

In his address to the Knesset, Sadat, called the Arab willingness to fully accept Israel a "tremendous turning point - one of the landmarks of a decisive historical change."

Although his dramatic gesture in coming to Israel has opened up new opportunities for dialogue, the Knesset speeches today did little to advance the cause of peace. More important, the Israelis so far publicly have given Sadat nothing with which to win back approval of the rest of the Arab world for his visit to Jerusalem.

As far as the Israelis were concerned, the Sadat speech, for all its eloquence and drama, took a hard line and was perhaps even a little threatening. It offered little room for the type of compromises Israel regards as necessary.

Begin, in his speech, never once mentioned the Palestinians and touched only on peripheral issues like his offer of an open exchange of travel between the two countries.

He said Sadat had known before he came that Israel differed with its neighbors on final borders, but he offered a Geneva conference in which all these issues could be discussed.

But Begin's long discussion of Jewish persecution served to avoid the issues that Sadat raised and in response to Sadat's call for "understanding" of the moral case for the Palestinians, Begin offered a biblical defense of Israel's right to Palestine.

Opposition leader Shimon Peres probably put Israel's case forward as lucidly as anyone today when he said, "We will have to forego things we want, and you, Mr. President, will have to give up things you desire."

There was worry in both the Egyptian and Israeli camps tonight that Sadat's visit may not live up to anything near expectations.

Sadat said that his decision to go "to the end of the earth" - even to a country with which Egypt is technically at war - was done out of concern that blood, either Arab or Israel's not again be spilled in war.

"You want to live with us in this part of the world - in all sincereity I tell you we welcome you among us with full security and safety," Sadat said. He declared that the Arabs would accept any safety guarantees the Israelis wanted because the Arabs too would benefit by them.

Sadat did not paper over Arab mistakes of the past.

"We used to reject you. We had our reasons and our claims, yes. We refused to meet with you anywhere, yes. We used to brand you as 'so-called Israelis,' yes. We were together at international conferences and organizations with you and our representatives did not, and still do not, exchange greetings with you," he declared.

But Sadat said that the Arabs did not want to encircle Israel nor find themselves encircled by "destructibe missiles, ready for launching, nor by the shells of grudges and hatred."

President Sadat also accused Israel of having built a "huge wall between us which you tried to build over a quarter of a century, but it was destroyed in 1973." Sadat was referring to the war in whcih Egypt managed to regain some territory east of the Suez Canal.

But the Egyptian President stated that "unequivocably we agree to any guarantees that you accept . . .

"In short, when we ask what is peace for Israel, the answer will be that Israel live within her borders with her Arab neighbors in safety and security within the framework of all the guarantees she accepts, and which are offered to other parties."

Sadat stated early that he had not come to sign a separate peace treaty with Israel or any further interim agreements in the Sinai. To do so would be simply to "delay the fuse from igniting," he said.

No separate peace with any one of the confrontation states would bring real peace, he declared, just as no separate peace with all of the confrontation states but without the Palestinians could be considered a real peace.

"I tell you that there can be no peace without the Palestinians. It is a grave error of unpredictable consequences to overlook or brush aside this cause," Sadat said.

"Peace cannot be worth its name unless it is based on justice and not on the occupation of the land of others," Sadat said.

"It would not be approciate for you to demand for yourselves what you deny other. I tell you that you have to give up once and for all the dreams of conquest, and the belief that force is the best method of dealing with Arabs."

Sadat said the whole world recognized that the Palestinian question was the "crux" of the problem and this was realized even by the Americans. It did Israel no good, he added, to pretend that the problem did not exist.

As for the occupied territories, Sadat said,

o speak frankly, our land did not yield itself to bargaining. It is not even opent to argument . . . None of us can accept to cede one inch of it or accept the principle of debating or bargaining over it."

Sadat insisted that only a complete withdrawal from all territories occupied in the 1967 war, including East Jerusalem, would suffice.

The Israelis can no longer say, as they so often have in the past, that no Arab leader is willing to recognize Israel as a legitimate neighbor. But there was little indication tonight that Sadat's unprecedented visit and his presentation of the Arab position had caused any dramatic breakthroughs.