CAIRO, AUG. 19 -- Iraq today ordered thousands of Westerners in Kuwait to go to three hotels for relocation to strategic military and civilian sites, while Iraqi leader Saddam Hussein said he would free the foreign nationals if President Bush withdrew U.S. forces from Saudi Arabia and a worldwide trade embargo against Baghdad were lifted.

The White House dismissed Saddam's offer, and the U.S. State Department said it would not instruct the estimated 2,500 Americans in Kuwait to comply with the Iraqi order. "We wouldn't order them around, and we wouldn't want the Iraqis to order them around either," a State Department official said.

It was the second time since Thursday that Iraqi officials had sought to round up Westerners to use as shields against possible attack by the U.S.-led forces that began massing in the Persian Gulf region after Iraq invaded Kuwait on Aug. 2 and moved troops to the Saudi border. Iraq issued veiled threats today that those who refused to comply with the order would be taken by force.

In Baghdad, CBS News reported that Iraq had split up a group of 35 Americans it had been holding incommunicado and taken some of the detainees to munitions and chemical-producing sites around the country. It also reported that U.S. Embassy officials searching the Iraqi capital for the estimated 500 Americans trapped there had located 28 men, 4 women and 3 children and given them refuge in diplomatic quarters.

Meanwhile, White House officials continued their policy of not describing the Americans as hostages. "We would not use that word," White House Press Secretary Marlin Fitzwater said aboard Air Force One as it carried Bush from his vacation home in Maine to Washington. Once there, Bush met for two hours with some of his national-security advisers on the latest developments in the gulf.

Britain's Foreign Office advised its estimated 4,000 nationals trapped in Kuwait to stay at home and "maintain a low profile" but not to resist if Iraqis tried to force them to move. It reported that Iraq had already moved some foreign nationals to defense and oil-producing installations that might be targeted by U.S. and other forces in the region.

"In addition to British citizens, French, West Germans and Americans have been affected," the Foreign Office said in a message. "The Iraqis have said that those who report to the hotels as instructed will be transferred to what are described as key installations in Kuwait and Iraq. Those who do not report to the hotel will be rounded up and taken directly to the sites."

The French government, confirming for the first time that 27 of its nationals were being detained by Iraq, reversed policy today and ordered its fleet in the Persian Gulf to use force if necessary to ensure compliance with U.N. sanctions against Iraq. France, which had been one of Iraq's principal backers and arms suppliers, had earlier argued that imposing a blockade against Iraq would make Western nations co-belligerents in the crisis.

The oil-rich United Arab Emirates also agreed to take a more active role in the international effort to isolate President Saddam, saying it would allow the deployment of Arab and "friendly" forces on its territory to help defend the region. U.S. troops being deployed in Saudi Arabia have been joined by troops from Egypt, Morocco and Syria.

Today's actions came on the heels of a U.N. Security Council demand issued late Saturday night calling on Iraq to release all foreign citizens and do nothing to jeopardize their safety or health. The Security Council was convened after Iraq warned that the detainees would suffer any deprivations that resulted from the worldwide trade embargo against Iraq.

The five permanent members of the Security Council -- the United States, the Soviet Union, China, France and Britain -- met informally today at the French mission to the United Nations and discussed the possibility of joint military action in the Persian Gulf if Iraq did not release all foreigners. Another meeting was set for Monday.

Of the more than 1 million foreign nationals caught in Kuwait and Iraq at the time of the invasion, there are now believed to be nearly 13,000 Westerners trapped -- 9,000 of them in Kuwait and nearly 3,000 in Iraq. Along with the Americans and British, they include an estimated 560 French citizens, 640 West Germans, 550 Canadians, 500 Japanese and smaller numbers from dozens of other countries.

In Baghdad, the speaker of Iraq's National Assembly announced that as a "goodwill gesture" his country was releasing an unspecified number of Westerners from countries that have not sent military forces to the Persian Gulf -- notably Austria, Sweden, Switzerland, Finland and Portugal.

In a statement released by the Iraqi News Agency, speaker Saadi Mehdi Saleh said others might be let out "in the light of their countries' position in not imposing sanctions on the import of food, medicine and other goods to Iraq." He did not say how many people would be allowed to leave, but there are an estimated 570 nationals of those five countries in Iraq and Kuwait.

Iraq has permitted a torrent of Arab and Asian foreigners to leave, with more than 100,000 flocking to Jordan and many thousands more to Saudi Arabia. Jordanian border officials said today they had asked Baghdad to allow only 5,000 people to cross into Jordan each day because they were having difficulty handling the influx, but Baghdad has ignored the request. About 9,000 refugees, mostly Egyptian laborers, crossed Jordan's scorching frontier post at Ruweished today.

Saddam, in what he called a diplomatic initiative, said tonight he would allow Westerners to leave Iraq and occupied Kuwait if Bush gives a U.N.-guaranteed pledge to withdraw all U.S. troops from the region and lift the economic embargo against Iraq.

"Averting death and starvation resulting from American policy against Iraq, by preventing some citizens from traveling, is a gain for humanity as a whole," the Iraqi president said.

Saddam, in a message that was addressed to the families of the trapped foreigners and broadcast from Baghdad, warned that if war breaks out, tens of thousands of people on both sides will be killed.

He said that if his initiative were not accepted, the Westerners would be held in strategic installations in Kuwait and Iraq until the threat of war is over. He called for "in-depth dialogue" with the governments whose nationals are being interned.

Saddam said that either the U.N. Security Council should guarantee that U.S. forces leave Saudi Arabia according to a fixed timetable of "no longer than it took these forces to come to the region," or Bush himself should make "a clear, public and unambiguous" commitment to withdraw American troops and lift the blockade. At the same time, Saddam said, both Iraq and Saudi Arabia would guarantee that neither would attack the other.

The Iraqi president, who has annexed Kuwait, said the question of sovereignty of Kuwait would be treated "as an Arab issue, as happened with all similar issues, such as the Western Sahara issue between Morocco and the parties to the dispute, like the Syrian occupation of Lebanon and other issues."

Fitzwater rejected Saddam's proposal, saying it "doesn't have much relationship to our objective. It contains no new relevant proposals and makes no reference to the United Nations' and Arab League calls for them to leave Kuwait.

"It seems we're getting a daily seminar of Iraqi ridicule these days," he added.

The Iraqi Interior Ministry ordered all foreigners in Kuwait, which Baghdad now calls southern Iraq, to gather at three hotels for relocation but gave no deadline for the assembly process. The ministry order said:

"To ensure the lives of Western foreigners and Australians present in the Iraqi cities of Kuwait, Nida {Ahmadi}, Jahra and those within its administrative border, they have to assemble in the following hotels: Hyatt Regency, Meridien and International.

"Anybody who does not comply with this call, they and their governments bear full responsibility for any evil consequences resulting from acts against them by hostile elements."

Ahmadi, where a major refinery and terminal is situated, is about nine miles south of Kuwait City. Jahra is six miles west of Kuwait City.

Iraqi officials issued similar orders on Thursday, but the few foreigners who did turn up at the hotels found no Iraqis there to receive them, and most returned to their homes.

According to refugees fleeing Kuwait, resistance fighters there are staging desperate attacks against the more than 140,000 Iraqi forces believed deployed there, mounting sniper attacks and ambushes. One report said a suicide car bomber attacked an Iraqi position at a hospital in the Kuwait City suburb of Jabriyeh Friday, and a similar attack was reported at an Iraqi checkpoint near Kuwait's harbor on Tuesday.

According to CBS, some of a group of 35 Americans being held against their will by Iraqi officials had been sent to strategic sites around Iraq, including a sulfuric acid plant at Qaim near Syria, munitions and chemical sites at Taji and Baiji and a chemical and artillery facility at Iskandariyah.

In the Iraqi capital, the officer in charge of the U.S. Embassy, Joseph Wilson, was quoted by CBS as saying he and his staff were doing everything possible to prevent Americans from being taken into custody.

The embassy staff was reported to have searched exhaustively to locate and help Americans in Baghdad. The 35 Americans given refuge in U.S. diplomatic quarters had been taken from a hotel and were reported to be in good heath but "deeply concerned" the United States might attack Iraq.

The French Foreign Ministry today confirmed that 27 French nationals are being held in Iraq and that it had been informed they would be moved to key installations.

Meanwhile, an adviser to Palestine Liberation Organization Chairman Yasser Arafat, Bassam Abu Sharif, told French radio that President Francois Mitterrand had asked Arafat to intercede with Iraq to help French citizens leave Iraq and Kuwait.

The PLO also issued its first official declaration on the crisis, saying it favors a solution that would guarantee the integrity and security of Iraq, Kuwait and Saudi Arabia. In Abu Dhabi, United Arab Emirates, a leading PLO official for the first time called Iraqi's occupation of Kuwait illegal.