Iraqi President Saddam Hussein appealed to his fellow Arabs yesterday for help in resisting Iran's invasion and sent his deputy premier to Saudi Arabia and Kuwait to seek support.

Iraq indirectly acknowledged for the first time that Iranian troops were holding positions inside its territory, although Baghdad claimed that its forces had encircled the Iranians and "completely neutralized" them.

Both countries reported that fighting continued outside Basra in the southeastern corner of Iraq, where neither side appeared yet to have gained an advantage. A communique from Baghdad said that Iraqi jets scored direct hits on Iran's key oil terminal on Khark Island Friday, and a Tehran newspaper reported that rockets had destroyed one oil reservoir and damaged two others. Oil pumping was reportedly continuing normally, however.

Saddam Hussein, in his first public comments since the Iranian invasion late Tuesday, decried the "collapse of Arab solidarity" in the war. In a speech carried by the Iraqi News Agency marking the 14th anniversary of the coming to power of the Baath Party, he called for a "new, audacious attitude" by Arab nations against both the "Iranian aggression" and the Israeli invasion of Lebanon.

Conservative Arab states led by Saudi Arabia have given Iraq about $25 billion to finance its war since fighting began in September 1980, Western diplomats have reported. Except for a small contingent of Jordanian volunteers, however, no Arab troops have arrived to help Iraq fight Iran, which is primarily a Persian rather than Arab nation. In addition, Syria and Libya have broken with other Arab countries and given diplomatic backing to the revolutionary government in Iran.

King Hussein of Jordan, Iraq's closest ally in the fighting, has been in contact daily with Saddam Hussein since the Iranian invasion, according to informed sources in the Jordanian capital quoted by Agence France-Presse. King Hussein on Friday called for an Arab summit to reactivate inter-Arab mutual defense treaties, AFP said.

The Iraqi News Agency said Deputy Premier Taha Yasin was dispatched to meet with leaders of Saudi Arabia and Kuwait, apparently in an effort to obtain more money or direct military support. The pro-Western, oil-producing Persian Gulf states are worried about the declared goal of Iran to export its Islamic revolution.

So far the Persian Gulf states have generally adopted a wait-and-see attitude regarding the Iranian invasion, refraining from making public statements. They also did not have any immediate public response to Friday's suggestion by the United States that it would be willing to hold joint military exercises if gulf states felt threatened by Iran. The offer was made in a background briefing for reporters by a State Department official, who stressed Washington's fears about possible Iranian military action against U.S. friends in the gulf.

In Tehran, Iranian Prime Minister Mir Hossein Mousavi attempted to reassure the gulf states, saying that they should "absolutely not feel they are in danger." In a statement broadcast by Tehran radio, Mousavi called Iran's recent push into Iraq "a defensive solution" aimed at pushing Iraqi artillery out of range of Iranian territory.

Mousavi made his comments at Tehran airport before flying to Algeria, which sought earlier this year to mediate in the Iranian-Iraqi war. The prime minister said the trip to Algiers was planned long ago, however, and was not related to the recent intensification of the fighting.

Mousavi also dismissed as "imaginary" a remark attributed to his foreign minister, Ali Akbar Velayati, who was quoted Friday as saying that Iran was no longer seeking the overthrow of Saddam Hussein as a condition for making peace. In addition to Saddam Hussein's ouster, Iran has demanded $150 billion in war reparations and repatriation of expelled Iraqi dissidents as terms for peace.

Reports from the battle outside Basra suggested that the Iranian invasion force was fighting off enemy attacks and holding onto its narrow strip of Iraqi territory. U.S. officials have said that intelligence reports indicate that a large number of Iranian troops still are not committed to the fighting, and an additional attack is expected sometime this week.

Previous Iraqi military communiques had said that the Iranians had been driven back across the border, but yesterday's report said, "In the framework of an organized plan, our armed forces lured the attacking Khomeini clique forces into a certain area of Iraqi territory in order to encircle them and destroy them."

The communique said that Iraqi troops backed by helicopter gunships inflicted "very heavy casualties" on the Iranians and were pursuing remnants of the invasion force, but it did not say specifically that the Iranians had been pushed out of the country. The communique said that 550 Iranian soldiers were taken prisoner and 28 tanks destroyed.

In Tehran, press reports said that Iranian forces were holding their positions conquered at the beginning of the invasion. The government-run radio said Iranian troops had advanced "into the very midst of the enemy forces" and had killed or wounded 700 Iraqi troops. It added that Iranian artillery was shelling oil facilities in Basra, Iraq's second-largest city and its key outlet to the Persian Gulf.

It has been impossible to verify the claims made by the two sides because foreign correspondents have not been permitted to visit the battlefield. Reuter reported from Baghdad that a group of journalists flown by military helicopter to Basra was promised by the Iraqi Information Ministry to be taken to the nearby battlefield to witness "the successes achieved by the armed forces." Officials were unsure when the trip would materialize, however.

Residents of Basra said the thud of exploding bombs could be heard in the distance during the night, Reuter said. Despite the shelling, few of the approximately 300,000 inhabitants appeared to have left to seek safety.

Both sides reported further fighting in the highlands about 300 miles north of the main battle at Basra. Iraq said it had killed 101 Iranians in combat in the north, while Iran's communiques said its forces had opened two new fronts.

Iran, updating casualty figures from Iraq's air attack Friday on the western city of Hamadan during a prayer meeting, said that more than 100 persons had died and more than 500 were injured.

The attacks by the two nations on each other's oil facilities are likely to spur buyers' fears and help buoy prices on the spot market, but world oil supplies are currently considered adequate to prevent any sharp increase in prices unless the war widens to include other countries.

In another development, the independent Lebanese newspaper An Nahar quoted diplomats as saying that Iraq may annul its 10-year-old friendship treaty with Moscow unless the Soviets actively proclaim their support for Iraq.