DAMASCUS, SYRIA -- Syria's ability to fight a full-scale war with Israel is being eroded by economic reverses at home and an apparent decision by the Soviet Union to cut back on the volume and sophistication of Soviet-made weapons shipped to Syrian military forces, diplomatic sources here report.

Once seen by western analysts as the most privileged recipient of Soviet arms in the Middle East and the Soviets' most reliable ally in the region, Syria now appears to occupy a less than preeminent position in Soviet relations in the area.

The shift in Soviet policy, according to western officials, appears primarily linked to Soviet attempts to broker new Middle East peace initiatives by increasing diplomatic contacts with Israel, pressing for reunification of the Palestine Liberation Organization and maintaining good relations with Persian Gulf war adversaries, Iran and Iraq.

"The Soviets are not supplying major new items {to Syria} now," said one diplomat. "The flow of arms is down to a trickle, as a result of lack of money and of a Soviet strategy of not sending anything beyond replenishments for what is already there -- trucks for trucks."

One new weapons system that the Soviet Union is delivering, according to western officials, is the MiG29 jet fighter. But the delivery -- two squadrons totalling 24 aircraft -- is two years late, and Syria got these advanced jets only after India and Iraq.

"I haven't seen any {of the MiGs} flying or at the airfield. They may still be in crates," one western official said.

Even so, noted a western military analyst here, "you don't go to war with the MiG29, you go to war with your air force." The MiG29, a sophisticated aircraft designed for fighting from a distance, does not markedly improve Syria's ability to intercept an Israeli air attack, the analyst said.

Authoritative western sources here said published reports that the Soviets have given Syria SS23 surface-to-surface missiles capable of hitting deep inside Israel have not been substantiated.

"We haven't seen them, and you can't hide something like that in this country," one analyst said.

A chrome-plated model of the missile sits on the desk of Defense Minister Mustafa Tlas, who has declined to say whether Syria has the SS23 in its missile arsenal. "It just remains a model," said one western official. "The SS23 is a balance changer, and they {the Syrians} are not going to get it" under Moscow's policy of providing only defensive weapons to Syria, he predicted.

Syrian officials do not acknowledge that the gap between their military capability and Israel's is steadily widening, as the diplomatic sources maintain.

"There is absolutely no change," said Gen. Tlas, speaking through an interpreter in an interview. New Soviet initiatives in the Middle East, he said, "have not affected the policy of furnishing weapons to Syria."

But, Tlas added, a lack of resources is hampering Syria from attaining its goal of reaching military balance, or what he called "strategic parity," with Israel. "The Soviet Union knows the arsenal of Israel and that we are far behind Israel. We are better than before, but we have not achieved parity," Tlas said.

Tlas did acknowledge that the gulf war is draining resources from the Arab world that otherwise would have helped finance Syria's objective of reaching a military balance with Israel. "The money for strategic parity is being spent on Iran and Iraq" in the air war, Tlas said.

Syria's chief financial supporter is Saudi Arabia, which contributes $540 million a year in three installments, plus miscellaneous grants that often push the total over $600 million. Iran also makes an important contribution to the Syrian economy; it provided 7 million barrels of crude oil free in 1986 and 1987 and offers additional oil at discounted prices.

Syria, Tlas said, has to pay cash for Soviet weapons and does so to maintain its independence from Moscow. He responded to questions about new Soviet attitudes in the Middle East by saying, "When we ask for weapons, the Soviet Union has its own strategy and we have our own strategy, and they are not always in compliance."

Tlas said he accompanied President Hafez Assad to Moscow in April, "and we had to negotiate, bargain and fight bullet by bullet, cannon by cannon and bomb by bomb, and we still got the minimum of our needs."

The Soviet supply relationship enabled Syria to throw its 325,000-man Army and modern Air Force against Israel during the 1967 and 1973 wars. In 1982, Syria's Air Force was badly mauled when it rose against the Israeli invasion of Lebanon, but the Soviets fully replaced Syria's losses and provided even more sophisticated equipment, such as SA5 air defense missiles, to counter what had proved to be Israel's far superior aerial tactics and electronic warfare capabilities.

Syria's economic problems and a severe shortage of foreign exchange apparently have affected its ability to buy new weapons and maintain a high level of readiness, diplomatic and military sources said. A little more than a year ago, Israeli officials complained that new fortifications on the Syrian front lines and the installation of new layers of air defense emplacements might provoke Israel to strike preemptively against Syria.

But tensions have dissipated, perhaps due to both sides' preoccupations with internal problems, a western official suggested.

The key to Syrian readiness, a military expert explained, is the integration of Syria's Air Force in support of its ground forces. "The Air Force is just not up to the same caliber as it was," he said. "No doubt the training levels have decreased, because we just don't see as many flights. And regardless of what the ground forces are doing, you have to have integration with the air forces, and I question the proficiency of the Syrian pilots."

As a result, "Israel is relaxed," said one senior diplomat. "They don't see any threat, because economic problems have cut into the military readiness of Syria."

Diplomatic sources and military analysts here note that during Assad's consultations in Moscow in April, Soviet leader Mikhail Gorbachev pointedly stated the new Soviet thinking when he said in a public appearance with the Syrian president that "the reliance on military force has completely lost its credibility as a way of solving Middle East conflict."

Since that meeting, U.S. officials in the region have sought, largely without success, to glean details of the Soviet commitments for military assistance and the rescheduling of military debt that Assad brought back to Damascus. Much of the relationship remains shrouded, but western sources said evidence of reduced Soviet military supplies can be seen throughout Syria, where western officials are permitted to travel freely.

But Tlas, viewed by western diplomats as having perhaps the closest relationship with Moscow among of any senior Syrian official, voiced no criticism of Soviet policy.