SANTIAGO, CHILE, DEC. 6 -- President Bush today cautiously welcomed Iraqi President Saddam Hussein's decision to release the hostages in Iraq, but maintained his hard line against offering Saddam any concession to withdraw his troops from Kuwait such as linking the Persian Gulf crisis to a resolution of the Palestinian issue.

Bush said Saddam's move to release the hostages shows that the U.S. strategy of economic sanctions and the threat of war "is working," and insisted that Saddam comply fully with United Nations resolutions calling for complete withdrawal of Iraqi troops from Kuwait and the restoration of the Kuwaiti government.

"We've got to continue to keep the pressure on," Bush told a news conference here during a tour of five Latin American nations. He added later: "The release of all hostages would be a very good thing, but the problem is the aggression against Kuwait, and the man must leave Kuwait without reservation, without condition."

Bush's rhetoric, and similar remarks in Washington today by Secretary of State James A. Baker III before the House Foreign Affairs Committee, reflected the administration's determination to prevent mounting talk about a possible diplomatic deal from eroding the international coalition aligned against Saddam and the threat to use force if Iraqi troops have not withdrawn by early next year. U.S. officials appeared particularly anxious to ensure that a hostage release not boost sentiment on Capitol Hill and around the United States in favor of delaying military action against Iraq for months in order to give economic sanctions against Iraq more time to work.

Administration officials are worried that Bush's decision last week to open direct high-level talks with Baghdad could create pressure for a settlement that falls short of the U.N. resolutions. "The chief risk is that Saddam Hussein may think we blinked or that the West blinked" by agreeing to talks, a senior administration official said. "We're concerned that he's misreading what we did."

Bush said today there should be no confusion or misunderstanding about the U.S. position. "There is no give on the United States' side on that question," he said. "And there will be no give."

The president said he wanted to "gun . . . down" speculation that the United States is supporting a Middle East peace conference as part of a deal to end the gulf crisis, saying Saddam was simply trying to justify his own aggression by insisting that an Iraqi pullout from Kuwait be linked to settlement of the Palestinian issue.

"He needs to get out of Kuwait without trying to complicate this matter by talking about some Middle East peace settlement or peace conference," Bush said. "It is clear what his ploy is, and that ploy is not going to be successful."

The president added that while the United States "remains interested" in a settlement of the Palestinian issue, "there will be, and is, no linkage of the Palestinian, the West Bank issue."

Bush voiced administration concerns today in response to a question about possible back-channel diplomacy with Iraq. "There are no secret negotiations, direct or indirect, with Iraq over this question. None," he said. "And there will be none."

But Saddam's surprise announcement today represented another challenge to the administration and is likely to generate even more pressure for a diplomatic deal that falls short of full compliance with the U.N. resolutions. "That's what makes this thing so complicated," a senior administratioan official said.

At the same time, administration officials have indicated that if Saddam complied fully with the U.N. resolutions, the United States would not block him from trying to resolve his land disputes and other disagreements with his Arab neighbors.

Bush said that nothing Saddam has done recently to defuse the tension in the gulf has changed his thinking that the Iraqis must comply with the U.N. resolutions. He said he did not consider the delivery last week of "a couple of cases of Pepsi Cola" to the U.S. Embassy in Kuwait a serious move to resupply "the beleaguered" diplomats holed up there. Nor did he believe that the announced release of the hostages should be rewarded because "no single hostage should have been taken in the beginning."

"He doesn't need face {saving}," Bush said of Saddam. "He needs to get out of Kuwait without trying to complicate this matter by talking about some Middle East peace settlement or peace conference."

But the administration is embroiled in negotiations at the United Nations over a new resolution on the Palestinian issue. Having blocked consideration of it last week, before a U.N. Security Council vote on another resolution setting a Jan. 15 deadline for Iraq to withdraw from Kuwait or face military action, the administration is now trying to negotiate language it finds acceptable on the idea of a Middle East conference.

"We want a resolution we don't have to veto," an administration official said.

Baker noted in his congressional testimony today that "for a long time" the United States has said that an international conference on the Middle East, if "properly structured, at an appropriate time, might be useful." But U.S. officials are reluctant to support convening a conference now because this would likely be interpreted as a concession to Saddam and as a major affront to Israel, which strongly opposes the idea.

Administration officials were cautious about the move to release the hostages because they want to be sure Saddam will not apply unexpected conditions that could delay the release. "We've had a growing kind of assurance, but as the president said, we'll believe it when we see it," White House Press Secretary Marlin Fitzwater said.

Fitzwater said if Saddam is serious, "We will do everything that's humanly possible to get them out as quickly as possible."

David Good, a State Department spokesman in Washington, said U.S. officials want to be sure all Americans will be covered before instructing them to come out of hiding. "We need to know how they are going to give exit permits," Good said.

He said that the logistics of an evacuation, such as obtaining airplanes or processing exit papers, was not a major concern since U.S. officials have handled so many prior evacuation flights from Iraq and Kuwait. Other officials said that the United States has a number of C-141 transport jets available within an hour's flying time of Baghdad. They did not elaborate, but the implication was that the planes are in Saudi Arabia.

As a precautionary measure, the State Department broadcast a message over the Voice of America tonight to all U.S. citizens in Iraq and Kuwait. The department estimates that about 900 Americans are still in the two countries, including 88 who have been sent to Iraqi military or industrial installations to serve as "human shields" against a U.S. attack. The VOA message said:

"The Iraqi government has announced it intends to release all foreigners. We have asked for, but not yet received, information from the Iraqi government on when and how such such releases can take place. We will be pursuing this on an urgent basis.

"We are making preparations to evacuate all U.S. citizens as soon as they are permitted to leave. Until that time, stay where you are, stay in touch with the U.S. Embassy and monitor the VOA closely. We will let you know as soon as we have more information."

State Department officials have never released precise information about the number of Americans in Iraq and Kuwait for fear of disclosing too much to the Iraqis. But there are believed to be about 900 U.S. passport holders still in the two countries.

Sources said the number of Americans hiding in Kuwait is estimated at about 100. Another 88 Americans have been taken by the Iraqis as human shields to guard military and industrial complexes from attack. About 27 others are camped in the U.S. Embassy in Kuwait. An additional 75 Americans in Baghdad are considered at high risk of capture.

Many others included in the total American count are dual passport holders -- possibly married to an Iraqi or a Kuwaiti, or the child of a U.S. citizen.

Testifying before Congress, Baker called the planned release "a welcome and significant development," interpreting it as "a sign that our strategy of diplomatic and military pressure is working." He added, "It seems to me no coincidence that this announcement comes just one week after the international community has authorized the use of force."

But the secretary of state came under attack from House Democrats who fear the administration is rushing toward war without giving economic sanctions a sufficient chance to work.

"Why should we not wait for this policy of sanctions and diplomacy to work?" asked Rep. Lee H. Hamilton (D-Ind.), one of the most senior members of the House Foreign Affairs Committee. Baker responded that for diplomacy to be effective, the threat of force also must be credible.

As a sign that Saddam is still preparing for the possibility of war, the Defense Department announced today that Iraq has added 30,000 troops and 200 tanks to its heavily fortified positions in Kuwait and southern Iraq.

Pentagon spokesman Bob Hall said in Washington that the reinforcements boosted the number of Iraqi troops in the region to more than 480,000 and the number of tanks to 4,000.

House Democrats urged Baker to press for larger contributions from other countries, arguing that the United States has been bearing a disproportionately large share of the anti-Iraq effort. "We've made it very clear to all of our coalition partners that as we move into 1991, there will be a need for additional responsibility-sharing. And all of them, I might say, have, I think, recognized that fact," Baker said.

Staff writers John M. Goshko and Al Kamen in Washington contributed to this report.