President Reagan appealed to Congress and Western Europe yesterday to "resist this emotional clamor for punitive sanctions" against South Africa and said it would be "a historic act of folly" for the United States and the West "to write off South Africa" in the battle to end apartheid.

In the first speech of his presidency on South Africa, Reagan struck a defensive and sometimes defiant tone, telling congressional critics in both parties that sanctions would "cripple" South Africa's economy, throw thousands of blacks out of work, endanger the West's supply of vital minerals and potentially benefit the Soviet Union.

"If Congress imposes sanctions," Reagan said, "it would destroy America's flexibility, discard our diplomatic leverage, and deepen the crisis . . . . We must stay and work, not cut and run."

Reagan's address included no major new initiatives for pressuring Pretoria to end its system of strict racial segregation. But the president called for the establishment of a "timetable" to eliminate apartheid laws, the release of all political prisoners, and renewed his demand that jailed opposition leader Nelson Mandela be freed.

He said the South African government should lift the ban on black political movements and he again urged a "dialogue" between the government and its opposition about creating a new constitutional system. All these statements reflected previous administration policy.

In Johannesburg, Black Anglican Bishop Desmond Tutu described the speech as "nauseating" and said the West "can go to hell." He added, "Your president is the pits as far as blacks are concerned."

Reagan praised the regime of President P.W. Botha for "dramatic change" away from apartheid in recent years, but criticized Pretoria for the nationwide state of emergency imposed June 12, saying it "went beyond the law of necessity." The president also reiterated his call for an end to apartheid, saying the United States "cannot maintain cordial relations with a government whose power rests upon the denial of rights to a majority of its people, based upon race."

Although administration officials had indicated that Reagan would attempt to reach out to black opposition leaders, possibly including some leaders of the outlawed African National Congress (ANC), he made no such initiative. Instead, he twice criticized "elements" of the ANC for sponsoring terrorism.

At the same time, a senior administration official who briefed reporters said Secretary of State George P. Shultz is now willing to meet with ANC leader Oliver Tambo.

As Senate Foreign Relations Committee Chairman Richard G. Lugar (R-Ind.) had requested, Reagan refrained in the speech from using the term "constructive engagement," which has come to represent his embattled policy of seeking to use diplomatic persuasion rather than economic sanctions to influence South Africa.

But Reagan rejected most of the other suggestions made in an Oval Office meeting this week with Lugar, Senate Majority Leader Robert J. Dole (R-Kan.) and Sen. Nancy Landon Kassebaum (R-Kan.). The Republicans urged Reagan to mute his criticism of sanctions, consider limited measures aimed at the white minority government that would not hurt blacks, extend the limited sanctions he ordered in September and consider sending a special envoy to South Africa.

White House officials said the special envoy idea was still under consideration, but Reagan's speech appeared to have done nothing to restrain moves in the Senate to approve limited economic sanctions. The House has already approved legislation requiring total U.S. disinvestment in South Africa.

Reagan based the thrust of his argument against economic sanctions on the claim that the presence of western businesses in South Africa would help blacks while sanctions would hurt them. "Our own history teaches us that capitalism is the natural enemy of such feudal institutions as apartheid," he said.

The president emphasized that South Africa's economy is linked to other nations in the region, and that sanctions would hurt blacks there as well. He said U.S. and European businesses have been the "strongest allies" of blacks in South Africa. If disinvestment were required, "these progressive western forces will depart," he said, asking, "How would this end apartheid?"

Reagan said the South African government "has a right and responsibility to maintain order," but criticized its tactics, saying the regime "is only accelerating the descent into blood-letting." The nationwide state of emergency, he said, "went outside the law" by arresting thousands of people. "Such repressive measures will bring South Africa neither peace nor security," Reagan said.

Also, he said "behind the terrible television pictures" of South African violence "lies another truth," that South Africa is in "a state of transition" and that more and more people there "have come to recognize that change is essential for survival."

"The realization has come hard and late, but the realization has finally come to Pretoria that apartheid belongs to the past," Reagan said.

Emphasizing South Africa's strategic importance to the West,, the president described it as "one of the most vital regions of the world" that is "indispensable to the industrial economies of Western Europe," a repository of minerals "for which the West has no other secure source of supply." He added, "The Soviet Union is not unaware of the stakes."

Staff researcher James Schwartz contributed to this report.