Secretary General Javier Perez de Cuellar today announced that enough progress has been made toward resolving the 20-year Cyprus dispute to justify a summit meeting between the leaders of the Greek and Turkish communities on the island.

The announcement, which followed three months of negotiations and several near-breakdowns, was hailed by American and other western diplomats as a major breakthrough that has already brought the two sides closer to reunification in a federal state since the Turkish invasion of 1974 widened the gulf between the two groups.

Both Greek Cypriot President Spyros Kyprianou and Turkish Cypriot leader Rauf Denktash made significant concessions on territory and the structure of the federal government, the diplomats said. U.N. officials said that equally important was an easing of the deep personal enmity and distrust between the two men that prevailed when the "proximity talks" between each of them and the secretary general began in New York in early September.

Perez de Cuellar, a veteran Peruvian diplomat who served as U.N. mediator on Cyprus before becoming secretary general in 1982, held three rounds of meetings with Kyprianou and Denktash and finally presented them last month with his own formula for the summit meeting. "He felt," said one of his aides, "that everything had to be nailed down before they could proceed to the summit. It was a question of which side would budge."

Denktash was more eager for a meeting that would place him on an equal footing with Kyprianou, who retains international recognition as the leader of the legitimate Cypriot government. Eventually, diplomats said, both sides budged, as did the secretary general, who settled for less specificity than he would have liked on how governmental deadlocks between the two sides are to be resolved.

That remains the key issue, because the Turkish Cypriot minority demands veto powers to protect itself, but the Greek Cypriots fear the veto could be misused to bring the government to a standstill.

"After prolonged consultations with the two sides in Cyprus," Perez de Cuellar said in his announcement, "I have reached the conclusion that enough progress has been done to justify convening a high-level meeting on Jan. 17 between the two sides." He called it "a very constructive step forward, leading to the comprehensive solution of the Cypriot problem."

The Kyprianou-Denktash meeting, he said, would be held in New York or in Europe, and would run for two or three days. But he cautioned that while reaching the summit stage "is already progress," it is only "the beginning of an achievement; it is not an achievement so far." Although the secretary general refused to specify what had been agreed to in the negotiations, diplomats said that one of the major concessions was about territory.

The Turkish invasion of 1974 expanded the zone controlled by the Turkish Cypriot community, which constitutes 18 percent of the population, to about 37 percent of the island's land area. Denktash initially had offered to return seven small enclaves. Now he has offered to return all but 29 percent of the island, and the Greek Cypriots have modified their demand, offering to leave the Turkish community with 25 percent -- a gap the secretary general feels can be bridged at the summit.

There has been agreement that legislative power would be divided on the American model -- with equal representation for each of the two states in the upper house, and Greek Cypriot control of the lower house by a margin of about seven to three. It was also agreed in the talks that the executive branch would be divided along seven-to-three proportions.

What made the progress possible now, after 20 years of escalating disagreement, diplomats said, was the unilateral declaration of independence by Denktash last November. That meant the status quo, policed by a U.N. peace force since 1964, would begin to erode and raised fears in Washington that the dispute would embroil the communities' patrons, Greece and Turkey, and damage NATO.