SEOUL, JUNE 20 (SATURDAY) -- South Korea suffered its first fatality in 10 days of rioting last night, authorities said, when demonstrators in Taejon rammed a commandeered bus into police lines, killing one officer and injuring three others.

The death came several hours after Prime Minister Lee Han Key warned South Koreans by television that the government will have to make an "extraordinary decision" if peace is not restored soon.

Earlier yesterday, U.S. Ambassador James Lilley called on President Chun Doo Hwan to deliver a letter from President Reagan that reportedly urges moderation in dealing with the crisis.

{U.S. sources in Washington said Reagan's letter urged Chun to reopen the political dialogue with the opposition regarding constitutional reform and to use restraint in curbing violence, Washington Post staff writer Don Oberdorfer reported.

{Reagan, who declined to comment directly on the letter, told reporters that "obviously we're very concerned" about the civil disorders in Korea. The State Department, in a travel warning, cautioned Americans visiting Korea to "avoid large public gatherings in areas where demonstrations are under way."

{The White House also announced that it opposes economic sanctions against Korea, such as were proposed Thursday by Sen. Edward M. Kennedy (D-Mass.) and four other Democratic lawmakers.}

The death of the officer in Taejon could further heighten emotions in the crisis, which is the biggest challenge to Chun's government in its seven years of existence.

The government considers avoidance of fatalities a key element in quieting down the disturbances.

Troops have relied on tear gas as their main weapon and avoided use of firearms, keeping down injuries among the demonstrators. However, a student who was hit on the head by a gas canister last week is being kept alive only by life-support systems.

Demonstrators have also exercised de facto controls on weaponry. Though they could have brought out hunting guns, they have not done so.

In his address to the nation, Prime Minister Lee said that the government would continue for now to try to end through "dialogue and compromise" rioting that erupted June 10. Disturbances were reported yesterday in at least eight South Korean cities.

Lee's remarks were the government's first substantive statement to the public since street fighting broke out 11 days ago. They were generally moderate in tone.

A former law professor, Lee is not a familiar figure to South Koreans. He was appointed prime minister only last month as part of government efforts to quell a public uproar over the death of a student during police torture.

Lee expressed regret over the disorders and called for the protesters to desist. The riots are "not only seriously disturbing national life but also giving rise to public anxiety about the future," he said.

"The government and all citizens must exercise restraint, restore reason and patience and pool our wisdom and determination" to overcome the crisis, he said.

But he said that "should it become impossible to restore law and order through such efforts alone, . . . it would be inevitable for the government to make an extraordinary decision."

Koreans took that to mean a host of emergency measures that the government has considered in recent days, extending up to the extreme of imposing martial law.

However, Lee's generally conciliatory approach suggested that the government will continue with plans to offer political concessions to the opposition in an effort to end the crisis.

{Oberdorfer reported that the U.S. administration has reiterated to Seoul its view that a declaration of martial law would be a mistake under existing circumstances, as would be a resort to "garrison law," a condition that would include use of the Army to quell the disturbances but would leave civilian courts in authority. Official sources said these views were not included in the Reagan letter but in other communications in the last day or two.}

Central Seoul, the scene Thursday night of intense fighting between police and demonstrators, was quiet yesterday. But government television reported that protest rallies, many of them violent, occured at 24 university campuses in the city, with 27,000 students taking part.

The news media here reported that about 1,300 students at Seoul National University, the country's most elite, occupied a campus library overnight. Government television said that their slogans were becoming more and more extreme, with calls for revolution.

More unrest was reported in the cities of Kwangju and Pusan.

Political maneuvering continued yesterday toward high-level meetings between the ruling and main opposition parties.

The ruling party has proposed that its chairman and presidential nominee, Roh Tae Woo, meet with the opposition party's president, Kim Young Sam.

Yesterday, however, the opposition party said that Kim would only negotiate with President Chun. That is likely to cause complications, because Chun normally refuses to compromise the dignity of his office with discussions with politicians.