avier Perez de Cuellar took office as U.N. secretary general in January with a reputation as a decent but cautious man, and amid little expectation that he would be more than a capable caretaker of a moribund institution.

Six months later, the 62-year-old career diplomat from Peru finds himself at the center of a high-stakes exercise in international diplomacy as he attempts to head Britain and Argentina off a course of full-scale war over the Falkland Islands. Riding on what appears to be an impending final toss of the dice are expectations that his handling of the crisis could result in revived prestige for the office of secretary general as well as force skeptical governments to reconsider the U.N. potential for problem solving.

Perez de Cuellar, in fact, is now being favorably compared to Dag Hammarskjold, the personification of international organizations' efforts at problem solving of his era, according to U.N. officials and diplomats who have been closely involved with his efforts here.

When Perez de Cuellar arrived in January, the U.N. had already been relegated to the fringe of diplomatic reality on the Arab-Israeli dispute, the issues of southern Africa, and disarmament. It had proved unable to mediate between Iran and Iraq, break the deadlock in the Cyprus intercommunal talks, bridge the differences on the sea-law treaty, or find a formula to launch an economic dialogue between industrialized and developing nations.

Diplomats are already saying that Perez de Cuellar has proved, in the Falklands situation at least, that his restraint, self-effacement and savvy are more effective than the assertive mediating tendencies of his predecessor, Kurt Waldheim.

Like Perez de Cuellar, Hammarskjold was an unknown quantity in 1953 when he came to office. He was initially distrusted by both superpowers and ran afoul of Washington by seeking to assert the right of the Security Council to debate American intervention in Guatemala in 1954.

Hammarskjold, however, had two years after taking office to consolidate his international reputation, first by getting Peking to release 11 imprisoned American fliers. This success led to his active roles in much broader crises, including Suez, Laos, Tunisia, Lebanon and the Congo.

When the Falklands crisis erupted on April 2, the Security Council called immediately for an end to hostilities, Argentine withdrawal and negotiations. Perez de Cuellar, facing the threat of war in the South Atlantic less than four months after assuming the top U.N. job, confirmed his reputation for caution by taking no public role.

There were grumblings from some U.N. officials that he should have seized his first chance as a problem solver at the outset. Instead, Secretary of State Alexander M. Haig Jr. made the early running.

The secretary general simply let it be known that he had formed a Falklands "task force," headed by Rafeeuddin Ahmed, a Pakistani career man at the United Nations who had been deeply involved in the mediation effort of Waldheim during the Iran hostage crisis. The U.N. team drew up contingency plans for possible U.N. peace keeping and administrative chores on the islands. On April 19, Perez de Cuellar quietly informed Britain and Argentina that he was available and provided each with an outline of what the United Nations could offer.

In retrospect, his timing was perfect. The secretary general came forward publicly only on April 30, after the first American effort failed and Haig announced that the United States was siding with Britain. "It was my duty to enter the picture," Perez de Cuellar said. "The vacuum had to be filled."

He met that day with Argentine Foreign Minister Nicanor Costa Mendez, who announced that his government would welcome a U.N. peace initiative, and on May 2, with British Foreign Secretary Francis Pym, who remained cool at first.

Despite this British reserve and the absence of any mandate from the Security Council, Perez de Cuellar launched his own peace proposals, which sought to avoid the roadblock Haig had hit by postponing until the second stage of negotiation the critical issue of sovereignty over the islands.

The U.N. plan, like Haig's, included a cease-fire and a mutual pullback in stages of Argentine occupation troops and the British fleet. But it envisioned an interim U.N. administration of the islands while talks on the sovereignty issue went on under a U.N. representative.

The secretary general called the Argentine reaction "positive," even though it was noncommital on the content of his plan. And he called the British reply "positive," even though British sources described it as a substantive counteroffer.

Perez de Cuellar managed to block an open meeting of the Security Council, the body that has been central to U.N. action in previous crises. Such a debate, requested by Ireland after the sinking of the Argentine cruiser General Belgrano, could have hardened positions on both sides. Instead he wielded the threat of the council debate (which neither side wanted) as his only lever to prod both sides into responsiveness.

On May 7--as Argentina closed down the last alternative channel, involving the United States and Peru--Perez de Cuellar began his mediation process in earnest. Since then, both British and Argentine sources have privately been generous in their praise of his skills.

He met alternately in his 38th-floor conference room with British Ambassador Sir Anthony Parsons and Argentine Undersecretary of State Enrique Ros, never bringing them together, never showing one side the written position papers of the other.

Instead, he put ideas to each without making clear what in them was the other side's proposal and what was his own--a daring technique that surprised those who expected more caution from him. The move has worked and "he never got into the position of having to backtrack," one insider said.

"He got each side to clarify their positions on each idea," says a U.N. official, "suggested possible areas of agreement, noted the areas of disagreement, and asked each side for ideas on how to overcome the problems."

Rather than tackle one issue at a time, Perez de Cuellar dealt with all issues at each meeting, which meant that some agreements were reached in principle and left to be fleshed out at a later date.

So far, the secretary general has not put any demands to either side on a take-it-or-leave-it basis. U.N. officials said he is "reaching the stage now of possibly asserting himself to bridge the final gaps."

If the talks collapse, Perez de Cuellar could be accused of failing to push more strongly at the right time--a restraint which has thus far appeared to be his strongest negotiating asset.

"He will not let himself be pressured to make demands he considers untimely or futile," said the U.N. official, who is familiar with the process. "Sure they'll blame him for that if he fails, but if you think he can tell Thatcher or Galtieri to accept what they will not accept, you have misread both of them. Premature assertiveness would be as detrimental as late action. And don't forget, if the worst happens, Perez de Cuellar may have a role to play afterward--and he must preserve himself as a credible interlocutor in that event."

The American role in the U.N. talks has been clouded with controversy. U.N. officials and some Americans here believe Washington has denigrated the secretary general's efforts.

"There is a perception here that a sour-grapes attitude in Washington has stiffened Britain in the belief that it can count on its good buddies in America and tough it out at the U.N., " one American official conceded.

But U.S. Ambassador Jeane Kirkpatrick has praised Perez de Cuellar's effectiveness and revised her earlier suggestion that the United Nations is not an apt arena for problem solving.