Chairman Yasser Arafat today turned back radical critics of his leadership of the Palestine Liberation Organization, maintaining room to maneuver in responding to the Reagan administration's initiative on the future of the Israeli-occupied West Bank and Gaza Strip.

After months of internal wrangling following the PLO's defeat and evacuation from Beirut last summer--and four consecutive late night sessions here--the expanded PLO executive committee adopted "recommendations" backed by Arafat that, while criticizing the Reagan plan as "insufficient," did not accede to radical demands that it be rejected outright.

The recommendations still must be approved by the Palestine National Council. That unofficial parliament-in-exile this evening gave Arafat a standing ovation of rhythmic applause as about 350 delegates opened its 16th sesssion with Palestinian fortunes at their lowest ebb since the PLO was founded in 1964.

Delegates from 90 countries--representing 3.5 million Palestinians living in the diaspora--were expected to approve the recommendations at the seaside Club des Pins conference center 15 miles west of Algiers.

The national council is controlled by Arafat and his mainstream Fatah organization. But Arafat nonetheless was unable to force his radical and pro-Syrian adversaries inside the umbrella PLO to accept his majority view as formal resolutions and instead had to settle for what his spokesman called "rough draft" recommendations.

On most key points Arafat's very threat to push through his views was enough to silence the minority and maintain the national council's unbroken tradition of consensus decision making. The radicals had tried to push outright rejection of Reagan's plan, presented Sept. 1, that calls for the freezing of Israeli settlements and prevention of Israeli annexation of the West Bank and Gaza Strip and their association in federation with Jordan.

Instead, the draft language approved by the executive committee simply said that the Reagan plan was "insufficient" because it did not recognize the PLO's claims to being the sole legitimate representative of the Palestinian people and their right to an independent state.

Fatah sources said, however, that Arafat felt unable to go to the mat with the radicals over his personal preference for allowing non-PLO Palestinians--in the person of West Bank mayors--to represent the PLO in a joint delegation with Jordan in any eventual negotiations with Israel. The radicals insisted that the PLO alone openly represent the Palestinians in such negotiations and delegates applauded thunderously when national council chairman Khalid Fahoum reiterated this stand in his opening address.

Although the absence of any recommendation on the composition of Palestinian representatives theoretically left Arafat free to maneuver, in fact the lack of clarity left King Hussein of Jordan stymied. The king had counted on a clear-cut stand from the national council as a key factor in making good his promise to declare by March 1 whether he would enter the negotiations proposed by Reagan.

The radicals had insisted that the PLO be fully represented despite Israeli, Jordanian and American objections. But with the United States unable to persuade Israeli troops to leave Lebanon, Arafat apparently felt he was in no position to ask the radicals to accept a compromise for increasingly uncertain negotiations. King Hussein of Jordan is not believed ready to enter such talks under the Reagan plan formula--consistently rejected by Israel--without proof of American determination in Lebanon.

Despite the traditional shouts of "Revolution until victory" as his Algerian host, President Chadli Bendjedid, held Arafat's hands high in the air amid rhythmic clapping, the mood was somber in the smoky, egg-shaped meeting chamber dominated by a map of Palestine.

Even Arafat's seeming success in fending off radical efforts to limit his freedom struck many of his followers as a hollow victory in view of the weakness of the PLO and of the Arab world.

Arafat did succeed in brushing aside radical efforts to limit his contacts with Egypt, still officially ostracized in most of the Arab world because of its separate peace with Israel. A recommendation approved immediate relations with the Egyptian opposition, and more than 80 prominent Egyptian opposition politicians and even progovernment journalists were Arafat's guests at the meeting.

Contacts with President Hosni Mubarak's government, which the radicals had bitterly criticized, would move ahead, Fatah sources said, just as fast as Cairo backed away from the Camp David accords, a compromise that in practice left it up to Arafat to decide how and when to move.

The only question still unresolved concerned future links with Israelis opposed to their government's Palestinian policy. Arafat has met with Israelis, but the Palestinian radicals insisted that such links were in violation of earlier resolutions banning contacts with any partisans of Zionism.