The failure of Jordan's King Hussein and Palestine Liberation Organization Chairman Yasser Arafat to reach agreement on further Middle East peace steps in talks that ended here last week can be attributed largely to Soviet pressure on Arafat, a western diplomatic source here has charged.

U.S. officials were deeply involved in the two weeks of talks, in which Washington had hoped that Arafat and the PLO would accept U.N. Security Council Resolutions 242 and 338, which implicitly recognize Israel's right to exist, and declare their willingness to negotiate with the Israeli government.

But the western diplomatic source, who would not be identified, said that the Soviet ambassador to Jordan met with Arafat at least three times during the past two weeks and played a significant role in persuading him not to accept Resolution 242, which is considered by Jordan, the United States and Israel as the recognized term of reference for any Arab-Israeli peace talks.

In addition to declaring the right of all states in the region to exist within secure boundaries, thus implicitly recognizing Israel, the resolution -- and Resolution 338, which reaffirms it -- also calls for Israel's withdrawal from Arab lands it occupied in the 1967 war.

The Soviets feared that PLO acceptance of 242 would draw the PLO, through Jordan, into a U.S.-sponsored peace process that would give the Soviet Union a minimal role, the western diplomat said, and persuaded Arafat to forget about 242 and his agreement last February with Hussein to pursue Middle East peace negotiations along the lines of U.N. resolutions dealing with the issue.

In exchange, the source said, the Soviets promised to throw their weight behind reunifying the fragmented PLO by using their leverage with several Syrian-based Marxist PLO factions and Syrian-sponsored rebels opposing Arafat's more moderate policies.

As a result of his choice to accept the Soviet offer, however, the western diplomatic source speculated, Arafat eventually could be ousted from the leadership of the PLO despite assurances from the Soviet Union to back him as leader, because the only way of bringing back the rebels into the mainstream PLO could be to put Arafat aside.

The western source said that another hurdle in the talks was Arafat's refusal to commit himself to a moratorium on all forms of violence against Israel as soon as peace talks begin.

Arafat insisted that he could declare such a moratorium only if Israel released Palestinian prisoners or stopped expelling Palestinian activists from the occupied territories, the source said.

Arafat left here Friday night.