King Hussein and Palestine Liberation Organization Chairman Yasser Arafat embraced in a show of unity today after resuming their new dialogue in search of a joint strategy to free the West Bank and the Gaza Strip from Israeli occupation.

The two Arab leaders resumed the talks that they began with great fanfare in August but which have yielded few results. Their meeting followed talks this weekend here between the Jordanian king and U.S. special envoy Philip C. Habib.

The PLO Central Council heavily criticized the Reagan plan at its meeting in Damascus, Syria, Thursday but stopped short of formally rejecting it. Israel opposes the return to Arab rule of the territories captured in the 1967 war and rejected the Reagan plan.

Despite these responses, Habib, as Reagan's representative in the area, is seeking to convince Hussein and other Arab leaders, and through them, Arafat and the PLO, that only the Reagan plan offers a hope to gain an Israeli withdrawal from the West Bank and Gaza. The U.S. initiative calls for self-government in the occupied territories in some sort of federation with Jordan and a freeze on Jewish settlements. But it does not allow for an independent Palestinian state and calls for Jordan to represent the Palestinians in the occupied territories in the talks.

Hussein, who has said he cannot negotiate for the Palestinians without a mandate from the PLO, and Arafat, who insists that to give up the PLO's claim to be the legitimate representative of the Palestinian people would destroy his organization, began meeting in October to explore possibilities of another common approach to the problem.

Those discussions, which resulted only in a general agreement about a hypothetical link between Jordan and any future Palestinian state on the West Bank and Gaza, were renewed last night in a meeting between Hussein and Arafat.

Today, in a rare gesture, Hussein formally opened the first meeting of the PLO's Higher Council for Education, Culture and Science since it moved here from Beirut following the PLO's forced evacuation from the Lebanese capital after an Israeli siege this summer.

Hussein in his opening speech, and Arafat in his reply, spoke in glowing terms of Jordanian and Palestinian unity and the common historical and cultural ties that bind their two peoples together. After Arafat's speech the two embraced before the audience.

The display of warmth, however, was not expected to advance the search for a common policy on negotiations much further, according to Western diplomats here familiar with the positions of both sides.

Habib, in his visit here, made clear that Washington was not prepared to modify any of the terms of the Reagan plan, according to U.S. sources. That seemed to make it unlikely that Hussein would step forward to enter negotiations because he has said repeatedly he could never do so without PLO authorization.

Hussein, who is to visit Washington Dec. 21, had hoped that before traveling to the United States, the PLO would have formulated a new policy that might open the doors to negotiations and would have approved that policy by a meeting of the Palestine National Council. Such a clear-cut PLO stand would have allowed him to approach Reagan formally to suggest modifications that might be acceptable to the PLO.

But since its evacuation from Beirut, the PLO leadership has been unable to arrive at a consensus on its future strategy.

Even if it did meet, PLO officials insisted, it would not come up with any policy that would open the door to negotiations along the lines of the Reagan plan. They said the PLO is only prepared to go as far as the peace plan advanced by the Arab summit at Fez, Morocco, in September. That plan, which implies a mutual recognition between the PLO and Israel, demands that an independent Palestinian state be set up on the West Bank and Gaza.

Hussein is expected to hold further meetings with Arafat here in the coming days to explore the question, as well as PLO requests that its presence, be expanded here. It was expelled 12 years ago in a bloody confrontation with the king's Army.