Chairman Charles H. Percy (R-Ill.) of the Senate Foreign Relations Committee said yesterday that the Reagan administration has decided that the Central American country of El Salvador is "the place to draw the line" against communist influence on the basis of "irrefutable

Percy, in a breakfast meeting with reporters, approved the growing United States commitment to that country, even while saying that the ruling junta there is "as unpopular with their own people as was Vietnam," referring to the former Saigon government long supported by the United States.

The foreign relations chairman, who was briefed along with other congressional leaders by Secretary of State Alexander M. Haig Jr. on Tuesday morning, was not specific about how far Washington is prepared to go to back the Salvador government and shut off the flow of outside arms. Asked if the administration would blockade Cuba to prevent arms shipments from that source, Percy said no option is ruled out, but that at this point, the response under discussion is "modest assistance" by the United States to Salvador.

Percy made clear his view that basic U.S. relations with the Soviet Union and Cuba are at stake in the small country of 5 million people on the west coast of Central America.

"Haig is right, this is the place to draw the line," declared Percy. He said Haig has been telling the Soviets with growing precision what is expected of them and what will not be tolerated, in Salvador as well as in other areas of the world.

At stake for the Soviet Union in Salvador, according to Percy, is a new five-year grain agreement to succeed the pact expiring this fall, participation by Caterpillar Tractor Co. in the proposed natural gas pipeline from Siberia to Western Europe, and a new agreement on the limitation of strategic nuclear arms.

The Soviet answer to the United States at this point, Percy said, is that "there is no direct supply" from Moscow to the Salvadoran insurgents, though an arms supply to Cuban and Nicaragua is acknowledged.

"This gives us the right to go directly to the surrogates" of the Soviet Union and starkly lay down the U.S. position, the senator said.

"If Cuba ever wants to normalize relations with the United States, and the signals are very clear that they want to do so, "they will have to accommodate Washington on the question of arms to Salvador, Percy said.

Under questioning, he said that "the signals" from Cuba include a desire to lessen its dependence on the Soviet Union, which is unable to provide the markets and industrial assistance that the island nation needs. Describing Cuban President Fidel Castro as "torn" by indecision, Percy said it is yet unclear whether Cuba is willing to withdraw its troops from Africa and take other actions necessary for a rapprochement with the United States.

The Reagan administration, according to Percy, shows "no willingness" to improve relations with Cuba "unless there is a quid pro quo" in Cuban activities throughout the world.

Regarding the evidence, still not made public, that the Salvadoran insurgency is being armed from outside, Percy said it includes "dates, times, the place of everything that arrived" as well as data from intelligence satellities. He said the arriving weapons include Soviet captured American arms, among others.

Conceding that outside help is far from the whole problem in Salvador, Percy said that the United States must say to the Salvadoran ruling junta that "the repression is intolerable and the slaughter cannot continue."

An important symbol is the investigation of the deaths of four American women, believed killed by rightist groups allied with government security forces. On this point, said Percy, church groups back home in Illinois are "up in arms."