President Reagan, spurred by the possibility of a cease-fire in the Iran-Iraq war, says it is time to begin a dialogue with the government in Tehran about the fate of nine American hostages held in Lebanon.

Reagan made the remark a day after Sheik Mohammed Hussein Fadlallah, the spiritual leader of the pro-Iranian Hezbollah group believed to be holding the American captives, called for a "happy ending" to the hostage crisis.At a Rose Garden ceremony for the American Legion's Boys Nation, Reagan was asked by a reporter Monday whether the time was right for talks with Iran. He replied, "If they're willing and ready to talk, it's time."

White House spokesman Marlin Fitzwater and other administration officials hastened to say the United States would not negotiate anymore for hostages' freedom. They insisted the U.S. policy against dealing with terrorists remains in place but officials are willing to talk to legitimate Iranian authorities.

"Our position remains the same, that we are always available to talk - anytime, anyplace - about the safety or release of our hostages," Fitzwater told reporters Monday. "We will not negotiate for them."

The spokesman ruled out any discussion of ransom or quid-pro-quos for the captives and disputed Fadlallah's portrayal of the hostage situation as a complicated political issue.

"All they have to do is release them, period," Fitzwater said. "They took them off the streets; they can put them back on the streets."

Fitzwater said "any number of messages" have been passed between the United States and Iran through the Swiss government, including one last week in which the United States welcomed Iran's acceptance of a call by the United Nations for a cease-fire in the Persian Gulf war.

The losses in the war and the internal economic strains in Iran apparently led to the decision by the ailing Ayatollah Ruhollah Khomeini to seek a cease-fire with Iraq.