Egyptian President Anwar Sadat said today that he will resume the suspended negotiations on Palestinian autonomy, but he said the gap between Israel and Egypt remains "formidable."

Sadat spoke after the announcement that he would take over the duties of some minister, assisted by six deputies.The four-hour speech to parliament marked the formation of a new Cabinet.

The Egyptian leader unveiled a number of economic measures, including wage increases and reduced prices for basic commodities. He also denounced religious extremism, a move seen as a possible prelude to a crackdown on dissent.

Sadat said he had been pressed by rejectionist Arab states to dump the autonomy talks, but that he would continue because they are "part of the Egyptian strategy."

The Egyptian president said he had a lengthy telephone call from President Carter on Tuesday and that he had agreed with Carter's urging that the talks be restarted as soon as possible.

He said he would meet Thursday with outgoing Prime Minister Mustafa Khalil, adding. "We should respond to the resumption of talks after we declare our position [on them] tomorrow." Sadat abruptly suspended the talks indefinitely last week after a fruitless round of negotiations in Tel Aviv, saying he wanted time for reflection.

Sadat said martial law, which has been in effect since the 1967 Six-Day War with Israel, would be abolished effective at midnight Thursday. He noted that it had been imposed a number of times since 1914 and had led to abuses including arbitrary arrests and curbs on freedom of the press. "It has now ended for good," he said.

In his speech, Sadat made no direct mention of the sweeping changes in the government -- announced earlier by Vice President Hosni Mubarak -- in which the Egyptian president is to assume the mantle of prime minister but distribute executive responsibility to six deputy prime ministers picked from the outgoing Cabinet.

The Cabinet reshuffle will formally take place Thursday, Mubarak said.

As a result of the reshuffle Khalil will leave the government and become vice chairman of the ruling Democratic National Party, and Defense Minister Kamal Hassan Ali, a close confidant of Sadat, will become both foreign minister and deputy prime minister for foreign affairs, defense, services, information and production.

The streamlined Cabinet of six deputy premiers and 19 ministers, drawn from the outgoing 32-member Cabinet, is designed to give Sadat a firm grip on the government while he turns his attention from foreign policy to the myraid of domestic problems that continue to plague Egypt.

In announcing a new economic policy, Sadat said he will immediately lower prices of basic commodities, including food essentials and clothing, while at the same time increasing private sector wages by 10 percent, although he did not explain how Egypt's economy could sustain such measures. He also said he is increasing the minimum wage and aboilishing a defense tax on income.

He devoted an hour and a half to a minutely detailed account of recent religious unrest in Egypt, including allegations by leaders of the country's 4 million Copts that the government has been encouraging repression of that Christian sect.

Bristling with anger over what he termed a conspiracy by the Coptic clergy to "slander Egypt's reputation abroad," Sadat recounted in lengthy detail how the allegations against the government were raised just before he left last month for talks in Washington with President Carter.

"I rule as the Moslem leader of an Islamic state. Egypt is an Islamic country. It has a lending role in the Islamic world," Sadat declared.

But he vowed that the Coptic community would not be discriminated against, saying, "the true guarantee to Christianity in Egypt is Islam," referring to the Koran's admonition for love and tolerance of all religions.

Some observers interpreted Sadat's seeming preoccupation with the Coptic issue as a possible signal that he intends to place severe new restrictions on the extremist Moslem Brotherhood, which he regards as the most serious challenge to his leadership.

By issuing such a lengthy and vitriolic attack on the Copts -- in which he stressed that "there is no place in politics for religion and no place for religion in politics" -- Sadat appeared to be justifying the use of harsh measures against any form of religious extremism.

Sadat's speech was surprising in that it gave little or no attention, compared to the amount of time devoted to religion extremism, to topics that were expected to dominate the economy, the isolation of Egypt in the Arab world, Israel's behavior in the autonomy negotiations and the long-awaited government reorganization.

Sadat said it would be easy for him to pull out of the autonomy talks now that Egypt has regained 80 percent of the Sinai Peninsula, but added, "Egypt has a responsibility [and] we shall never shun our responsibility."

The only new appointment to the six deputy premierships was Fund Moheiddein, a prominent member of the National Democratic Party, who was put in change of Cabinet ministers.