Mayor Dennis J. Kucinich today rescinded all but 400 of 2,000 city layoffs he had scheduled for Tuesday.

The surprise announcement came as the Cleveland Trust Co., the holder of a $5 million note in default, gave the mayor extra time to pay off the debt, and as powerful city unions were gearing up for a legal confrontation.

Kucinich had planned to lay off 875 police officers and 450 firefighters and other workers in an austerity move he said would help the city cope with the aftershocks of the Dec. 15 default on $15.5 million in notes.

"The Cleveland Trust action changes the whole financial picture," Kucinich said.

Frederick K. Cox, vice chairman of Cleveland Trust, told the mayor his bank would not push for payment of the $5 million until after the Feb. 27 referenda on a 50 percent income tax hike and sale of the Municipal Light plant.

Other banks indicated that they would follow the Cleveland Trust action.

The mayor said he will still be forced to lay off 400 city employes, possibly police officers and firefighters, because the City Council has not given him authority to sell $6 million in city land.

Kucinich also said that, to avoid the remaining layoffs, state police and the fire pension board must also lift a $3.2 million lien they placed on city's property taxes when Cleveland missed its fourth-quarter pension payment last week.

The city still faces critical financial problems, as it expects to run out of cash in March, unless voters hike the income tax from 1 percent to 1 1/2 percent. It also must replenish $40 million to a capital improvements bond fund that had been emptied during the past seven years to pay operating costs.

Today, unions representing safety forces filed several lawsuits. One asks the court to block the city from laying off police officers or firefighters until white-collar workers ae first furloughed.

The 17 unions united against Kucinich after he told them last week to defer 5 percent scheduled raises and not fight the layoffs or else he would revoke their contracts and cancel union dues check-off agreements.

The unions, taking the mayor's hard-line stance as an act of war, began using pressure tactics that included lawsuits, alliance with the City Council and a campaign that was aimed at showing that the layoffs were uncalled-for.

Common Pleas Judge Richard Markus said the suits filed today became moot with Kucinich's announcement on the layoffs, and he told the unions to file new actions if the situation should change.

However, William D. Gallagher, president of the Fraternal Order of Police, said he wants a ruling from Markus on whether it would be legal for Kucinich to lay off policemen who have civil service protection while the city retains white-collar workers not covered by civil service.

Gallagher and others have said that Kucinich has put his political allies into these white-collar jobs and wants to protect them from the layoffs.

While the confrontation between Kucinich and the unions and banks has eased, there has been little thawing of the cold war between him and the City Council.

The council, required to meet today at the request of the mayor, shelved the mayor's request to place $14 million in 1979 income tax receipts and parcels of city land as collateral for the defaulted notes.

Majority Leader Basil M. Russo, a Kucinich enemy, criticized the mayor for creating a "phony crisis" over the layoffs.

Russo said Kucinich "toyed with the livelihoods of city workers" to pressure the council into passing his financial bailout legislation. Russo also said the mayor used the threat of layoffs to "terrify city voters into approving an income tax hike."