The United States and Iraq yesterday ended 17 years of official estrangement by resuming full diplomatic relations at the conclusion of a symbolic White House meeting between President Reagan and a senior Iraqi official.

Describing the resumption of ties as "a positive development," a senior State Department official sought in a White House briefing to discourage expectations of large-scale changes in Washington's policies toward Baghdad. Specifically, he said there is no change in prospect in the U.S. refusal to supply weapons or other military gear to Iraq or to Iran, its foe in the four-year-old Persian Gulf war.

Deputy Prime Minister Tariq Aziz, the highest-ranking Iraqi official to visit Washington since Baghdad broke off relations at the time of the 1967 Middle East war, described yesterday's development as the restoration of a "normal relationship between two countries. . . a necessity in the modern life."

If the Iranian government is "sane and responsible," Aziz said, it should see the resumption of U.S.-Iraqi relations as "in the benefit of the people of the two countries and. . . not directed against anybody else."

The State Department briefing officer told reporters, "We are prepared today to discuss improved relations with Iran." However, he noted two conditions: that Iran "ceases its support for international terrorism" and "is prepared to seek a negotiated settlement to the war with Iraq."

A Reagan administration determination in early 1982 that Iraq was not supporting international terrorism led to that country's removal from the U.S. "anti-terrorism list" and opened the way to the gradual improvement of unofficial relations.

Another factor in the increasingly close unofficial relations was U.S. concern that Iraq not lose the war with Iran, an outcome that could advance the cause of revolutionary Islamic fundamentalism in the strategic Middle East.

Iraq's decision to accept the principle of a negotiated settlement of the war, which it started by invading Iran in September 1980, has been the rationale for U.S. policies more favorable to Baghdad than to Tehran. The Senate Foreign Relations Committee recently described this as a "tilt toward Iraq."

In an unusual display of cordiality, the administration accorded Aziz separate meetings in rapid-fire order with virtually the entire top rank of the executive branch: Reagan, Vice President Bush, Secretary of State George P. Shultz, Secretary of Defense Caspar W. Weinberger and national security affairs adviser Robert C. McFarlane.

Reporters were told that the meeting with Weinberger was a "courtesy call" that did not denote the beginning of a U.S.-Iraqi military relationship. Officials said the customary exchange of military attaches seems likely, though no decisions have been made.

For protocol and perhaps political reasons, there were no public remarks between Reagan and Aziz, though the White House arranged for photographs of their 35-minute meeting.

Iraq made known to the State Department in September its willingness to resume diplomatic relations even before the U.S. presidential election, but this was put off until yesterday. Improved relations with Iraq are controversial with supporters of Israel, which considers Iraq among its bitter enemies.

In the absence of full diplomatic relations, Iraq and the United States established "interest sections" here and in Baghdad in 1972. These have been staffed by increasing numbers of official personnel -- currently 17 Americans in Baghdad and more than 30 Iraqis here -- who have had increasing access to the senior ranks of the host government. As of yesterday afternoon, the "interest sections" became embassies.