Algiers — The Palestine Liberation Organization will endorse US-backed peace negotiations with Israel based on President Ronald Reagan's peace plan if one word is added to the plan: ''self-determination'' for the Palestinians.
This was revealed for the first time in a forthright interview given by top PLO leader Salah Khalaf (Abu Iyad) at a seaside villa near the Club des Pins where the PLO's Palestine National Council (PNC) or parliament-in-exile is meeting. Abu Iyad is third in command of the PLO's predominant Fatah organization and has been its political spokesman at the PNC meeting.
In the clearest statement yet of the PLO position, he said, ''If the Reagan plan is improved by adding one word - self-determination -things would change completely.''
But Mr. Khalaf's proposal does not have the approval of the PNC, which has sharply criticized the Reagan plan while not rejecting it outright. The proposal appears to be an attempt by PLO chief Yasser Arafat and his moderate lieutenants to circumvent the restraints imposed on PNC resolutions by the need to maintain unity between moderates and hard-liners.
For two months the future of President Reagan's Mideast peace proposals has hinged in large part on one question: Will the PLO endorse a non-PLO Palestinian-Jordanian negotiating team that leaves the Palestinian organization out in the cold?
The Reagan plan does not support the creation of a Palestinian state. It calls not for self-determination but for association of the Israeli-occupied West Bank and Gaza Strip, inhabited by 1.3 million Palestinians, with Jordan in some form of confederation.
But King Hussein has been unwilling to enter negotiations alone for the West Bank - which he ruled until 1967 - because the PLO is the sole spokesman for the Palestinians recognized by the Arab League. He and the US have sought a joint delegation of Jordanians and non-PLO Palestinians but he first wants a ''green light'' from the PLO.
Until now the PLO has given no ''green light'' for such a delegation. It has insisted not only on self-determination but also on an active PLO role in negotiations, at minimum naming the non-PLO delegation.
Giving up a negotiating role presents the real risk that the organization might collapse. (The PLO is not mentioned in the Reagan plan and the US has opposed any PLO negotiating role, fearing to alienate Israel. The US will not talk to the PLO unless it unilaterally recognizes Israel, which so far it will not do.)
But according to Abu Iyad, PLO participation in negotiations is no longer a fixed requirement. ''Let your government accept the right to Palestinian self-determination, including the creation of a state, not to us (the PLO)'' - but to the Palestinian people, he said. ''I can assure you that Yasser Arafat and Abu Iyad would accept. The question of who is in a delegation is no problem to us.''
The most frequently mentioned candidates are West Bank elected mayors like Fahd Kawasmeh of Hebron and Mohammad Milhem of Halhul. Both were deposed by the Israeli authorities and are now living in Amman. They are both at the conference as observers in a careful distinction aimed at preserving their non-PLO status. When asked if he would accept a negotiating role under conditions such as those posed by Abu Iyad, Mr. Kawasmeh said ''yes.''
The Abu Iyad statement appears to be a last-ditch attempt to get the US to pay attention to the PLO even if it gives it no direct role.
Even though the debate here often seemed irrelevant to the PLO's precarious position following its expulsion from Beirut, the PLO leadership is painfully aware of the dangers. And moderates are frustrated and bitter at US disinterest in dealing with them. ''We have a card to play and no one will give us a table, '' said one pro-Arafat moderate.
It also represents a vehicle to skirt restraints of the PNC on the Palestinian moderate leadership who have become bogged down in battles over convoluted consensus wording at the lowest common denominator in an attempt to keep PLO moderates and hard-liners from splitting.
Chairman Arafat has expressed open anger at the attempts by PLO hard-line groups to impose restrictions on freedom to maneuver in the Arab and the international diplomatic arenas. In a speech in closed session on Sunday he pled emotionally for realism, asking delegates to give him enough space to function in the current complex situation and threatening to resign if he were denied.
It takes a Talmudic examination of the PNC's resolution on the Reagan plan and a thorough knowledge of backroom debates at the PNC to comprehend that the language does not reject the Reagan plan outright.
The resolution states that the PNC refuses to accept the Reagan plan as a basis for a just solution to the Palestinian problem because it denies the Palestinians self-determination and refuses to recognize the PLO. But the absence of the word ''reject'' is seen as a victory by the PLO moderate leadership against the hard-liners.
When asked whether this wording was purposely designed to leave the door open for negotiations, Abu Iyad quickly answered ''yes.''
The final resolutions also oppose ''mandating or sharing'' the exclusive right of the PLO to represent the Palestinians, a limitation handily ignored by Abu Iyad's proposals.
Abu Iyad stressed that what he was saying was the personal opinion of himself and Mr. Arafat. ''It reflects the majority opinion but not all,'' he said. He said if Mr. Reagan modified his plan, it would be submitted to the PNC.
By pursuing a two-track policy, in and outside the PNC, top PLO leaders can explore the US reactions without compromising themselves unnecessarily.