UNITED NATIONS, SEPT. 24 -- French President Francois Mitterrand outlined a four-stage plan for Middle East peace today that appeared to differ in key aspects from U.S. views on how to respond to Iraq's invasion of Kuwait and its use of thousands of foreigners as human shields against attack.

Mitterrand, who spoke at the opening session of the U.N. General Assembly's annual meeting, said: "If Iraq were to affirm its intention to withdraw its troops and free the hostages, everything would be possible.

"At a later stage, the international community could be called on to guarantee the withdrawal of Iraqi forces and the restoration of the sovereignty of Kuwait and the democratic will of the Kuwaiti people."

Mitterrand, whose country was once a major arms supplier to Iraq, did not give specifics about how this would be done, but his language left the impression that a promise by Iraqi President Saddam Hussein to pull his forces out of Kuwait might be sufficient to end the tight economic embargo that the United Nations has imposed on Iraq.

Mitterrand's use of the term "the democratic will of the Kuwaiti people" caused widespread speculation among delegates here that Mitterrand, as a face-saving concession to Iraq, might be willing to accept Iraqi insistence that Kuwait's deposed rulers, the Sabah family, cannot be allowed to return.

If those were his intentions, both proposals would run directly counter to U.S. insistence that Iraq must get out of Kuwait before there can be any relaxation of the forces and sanctions arrayed against it and that the "legitimate rulers" of Kuwait must be restored.

On Sunday, Secretary of State James A. Baker III was asked during a television interview whether the United States might agree to a government in Kuwait without the Sabah family, which fled to Saudi Arabia when Iraq invaded Kuwait on Aug. 2. Baker replied that such a step would be "appeasement" of the kind that occurred in Europe in the 1930s, and he added: "I wouldn't want to see the world go down that road."

In detailing his plan, Mitterrand said the third stage would be aimed at resolving the civil war in Lebanon and the Arab-Israeli dispute in an effort involving Arab states and outside countries, probably through an international conference on the Middle East.

Here, too, Mitterrand's views were in conflict with U.S. policy. The Bush administration has promised Israel that it will not link the gulf crisis to the Arab-Israel conflict. The United States has said it would support an international conference only if it served as an umbrella for direct talks between Israel and Palestinians.

Mitterrand said that in the fourth stage of his peace plan, Mideast countries would make "mutually agreed arms reductions . . . stretching from Iran to Morocco, from the Mediterranean to the Atlantic."

U.S. and other diplomatic sources were reluctant to conclude that Mitterrand's speech put him at odds with the United States or that it represented an attempt to soften the tough line that the United States has sought to maintain in the world community.

In Washington today, President Bush held a raucous meeting with about 200 Arab-American leaders and declared that he was "not going to yield one inch" on his conditions for a negotiated settlement of the Persian Gulf crisis.

"We want a peaceful solution, but we don't want to do it and undermine -- and I'm not going to do it and undermine -- the solid consensus that exists in the world," Bush said when pressed by the Arab-Americans to seek a dialogue with Iraq.

"We're not going to yield one inch on those provisions," Bush said, referring to the publicly stated aims of his gulf policy.

Asked whether U.S. efforts to enlist Syria's aid in the multi-national effort against Iraq compromised America's moral position, Bush said his administration hopes that a "new world order" would change the behavior of Syrian President Hafez Assad, who has been accused of supporting terrorism by the State Department.

Most delegates here at the United Nations, while expressing hope that an armed conflict can be avoided, said U.S. espousal of a tough stance appeared to have been bolstered by Saddam's bellicose remarks Sunday threatening to retaliate against the embargo by launching attacks on Israel and oil installations in Saudi Arabia. Saddam continued his threats today, vowing to fight for "a thousand years" to keep control of Kuwait.

In Jerusalem, the Israeli government said today it was taking Saddam's threat seriously, and Prime Minister Yitzhak Shamir said all Israelis were ready to "confront, prevent and . . . defend ourselves" against Iraq.

Soviet Foreign Minister Eduard Shevardnadze, who attended today's U.N. session here, called Saddam's threats "inadmissible," saying that "any attacks would unleash a war and that would mean disaster."

British Foreign Secretary Douglas Hurd told reporters he thought it significant that Saddam spoke so bitterly of the embargo since Iraq previously had contended that it was having no effect.

The Security Council, which has adopted several resolutions against Iraq since the invasion, is collaborating on a new one that would extend the sea blockade already in effect against Iraq to the air. The 15 council members met tonight on wording to be considered Tuesday at a special meeting of foreign ministers.

One violation of the trade embargo, which bars all shipments to Iraq unless cleared by the Security Council, was plainly visible today in Amman, Jordan, where a convoy of trucks loaded with rice, powdered milk and other foodstuffs began to move toward Baghdad with horns honking and flags flying. Saddam has widespread support in Jordan, although other Arab nations have supported the multi-national effort against him.

Diplomats here said they would not comment on Mitterrand's intent until they had an official translation of his remarks, which were made in French.

Members of the French delegation in New York said they did not have a clear idea of Mitterrand's intent because he revised most of his speech just before delivery and left New York for home almost immediately afterward. Some sources suggested that he might have been influenced by domestic political considerations and took a flexible line to calm fears within France of a new gulf war.

Other sources said that while Mitterrand might be signaling tactical differences with the United States, he made clear that France seeks the same results as the other members of the Western alliance.

Mitterrand said that Kuwait's sovereignty "is not negotiable," called the taking of hostages "disgusting behavior" and lashed out at Saddam for "not giving one gesture, not one word, not even a glimmer" of complying with Security Council resolutions demanding that Iraq leave Kuwait and free the hostages. He noted that France is sending 4,200 ground troops to Saudi Arabia in addition to the naval and air forces it already has in the gulf area.

He also spoke angrily of how Iraqi soldiers ransacked the French ambassador's residence in Kuwait City on Sept. 14 and arrested French citizens there. The Iraqi news agency reported Sunday that Iraq had apologized for the incident, but Mitterrand said: "If there was a mistake, why proclaim it so late and why increase the number of hostages with new victims?"

In Paris, the French government today dismissed the Iraqi apology and called for the immediate release of all foreign hostages.

A French Foreign Ministry spokesman said no official apology had yet been conveyed through diplomatic channels. "Excuses are fine, but we are waiting for Iraq to allow French citizens to leave in a normal manner," Interior Minister Pierre Joxe said in a radio interview.

Among other speakers here today, Iranian Foreign Minister Ali Akbar Velayati spoke scornfully of how the United Nations has shown so much concern for Kuwait but did not take such draconian measures as an embargo to assist Iran in its eight-year war with Iraq. Velayati, however, gave no sign that Iran intends to violate its publicly stated policy of observing the embargo.

In Tehran today, visiting Syrian leader Assad extended his stay for a fourth day apparently to continue talks on the gulf crisis and the Western hostages being held by pro-Iranian gunmen in Lebanon. Assad, an archrival of Saddam's, is believed to be attempting to persuade Iran to abide by the U.N. embargo.

Washington Post staff writer Ann Devroy in Washington and correspondent William Drozdiak in Paris contributed to this report.