KENNEBUNKPORT, MAINE, AUG. 10 -- President Bush agreed in principle today to support Israel's request for $10 billion in U.S. loan guarantees, and he and Israeli Prime Minister Yitzhak Rabin instructed aides to work out details in time for a Tuesday announcement, according to U.S. officials.

The loan guarantee issue was the major piece of business awaiting action by the two leaders as they held the first of two days of meetings at Bush's vacation retreat here, complete today with sailboat protesters, power outages and walks along the rocky coast.

A senior U.S. official said Bush heard in some detail from Rabin about his plans to curtail settlement activity in occupied territories and was "satisfied" with how Rabin intends to proceed.

The United States has opposed expanded settlement activity as an impediment to Middle East peace talks now underway. Israel's request for loan guarantees, made last year to help resettle about 400,000 Jewish emigrants from the former Soviet Union, reached an impasse over the refusal of the government of former prime minister Yitzhak Shamir to halt settlement activity.

Bush has now decided he "wants the loan guarantees to go forward," said the senior official.

Rabin has canceled contracts for 6,800 units of housing planned for the settlements and has made it more difficult for settlers to move to the occupied territories by ending lucrative mortgage terms and tax benefits.

The Rabin government has not ended all new settlement activity, saying it will allow about 10,000 units already begun to be finished. The new government has also made a distinction between settlements for security purposes, which it says remain necessary, and those for political purposes, which it says will be halted.

But in a number of ways, Rabin has sought during his first month in office to create an atmosphere in Israeli-Arab relations more conducive to negotiation and compromise. He has, for instance, made the first visit by an Israeli prime minister to Egypt in six years and has pledged to accelerate talks on self-rule for the 1.7 million Palestinians in the occupied territories.

The loan guarantees would allow Israel to borrow money at lower rates since the United States would be guaranteeing repayment. Congressional approval is required for the guarantees, and would likely be forthcoming with Bush's support.

Administration officials said a number of details remained to be worked out tonight, including how certain housing units would be defined and what amount would be deducted from the loan guarantees if settlement activity continued.

One U.S. official said the president wants specific understandings on these issues so that any loan guarantee legislation would not have to address each detail and so "misunderstandings" could be avoided.

White House officials hope that Bush's support for the guarantees will assuage Jewish voters who have regarded the president's Middle East policies as tilting away from Israel. Bush got about 30 percent of the Jewish vote in the 1988 election.

In contrast to the strains that marked relations between Bush and Shamir, today's talks were described as warm, cordial and cooperative.

"The welcome mat is out," Bush said as Rabin arrived. Bush described himself as one of the prime minister's "many friends" in the United States.

"We would like to make sure that there is a better and more intimate relationship between our two countries, our two peoples, our two governments," Rabin said.

An Israeli official who briefed reporters said the talks on loan guarantees took place "in a very good atmosphere . . . {and} both sides showed a willingness to come to a positive conclusion."

Rabin's status as an overnight guest at the president's seaside estate was meant to signal a new cordiality replacing the acrimonious years with Shamir. Bush gave Rabin the full Kennebunkport treatment, escorting him through the grounds, introducing him to his mother and grandchildren and taking him for walks on the grounds and the rocky shore.

At one point, Bush and Rabin were chatting on a patio that faces the Gulf of Maine when a sailboat, sporting shouting Israeli protesters, appeared. The boat, rented by anti-Rabin militants, featured a banner that said "Kahane Chai" -- Hebrew for Kahane lives, a reference to Meir Kahane, the militant right-wing Israeli murdered in New York in 1990.

A startled Bush rushed into his house to point out the boat to aides. "I thought this guy was kinda' dead," Bush said, according to the Israeli briefer who told reporters about the incident.

Rabin, on his arrival, emphasized that he was determined to give the Middle East peace process a real chance "without endangering Israeli security."

The United States announced today it had received positive responses from all parties to begin a new round of peace talks in Washington on Aug. 24. It will be the first round of talks since Rabin took power last month.

Signaling a change from the Shamir government, Rabin said his Labor Party would "like to change the order of our national priorities." The real problems in his country, he said, are in the domestic field.

The Israeli leader arrived by motorcade from Pease Air Force Base in nearby Portsmouth, N.H., after fog kept him from traveling to the presidential estate by helicopter.

An area-wide electric power outage created some minor problems at first for the meeting. But power was restored about an hour after Rabin reached the presidential compound.