The Security Council voted Tuesday to send a 350-member observer force to monitor a cease-fire between Iran and Iraq, a day after Secretary-General Javier Perez de Cuellar said fighting will stop Aug. 20.

Iran and Iraq responded favorably by declaring their readiness to abide by the truce announcement Monday halting the nearly 8-year-old Persian Gulf war. Perez de Cuellar said peace talks would begin Aug. 25 in Geneva."In response to your very strong appeal made in the meeting of the Security Council, I wish to inform you that the government of the Islamic Republic of Iran is prepared to refrain from all military actions on land, at sea and in the air starting today, Aug. 8," Iranian Foreign Minister Ali Akbar Velayati said in a letter to Perez de Cuellar following the announcement.

Iraqi Ambassador Ismat Kittani, asked by reporters Monday when his nation would halt hostilities, replied, "Today."

In his cease-fire announcement before the 15-nation Security Council, Perez de Cuellar appealed to the warring gulf neighbors "to exercise utmost restraint" and refrain from hostilities until the cease-fire takes effect and a U.N. observer force is deployed along the 700-mile border.

There were no reports of major clashes Monday or Tuesday.

The 15-nation council approved unanimously a request by Perez de Cuellar to send the observer force that should be put in place three days before the Aug. 20 cease-fire goes into effect.

The council said the force will be set up for a six-month period.

Perez de Cuellar said he intended to deploy the main body of the observers together with support staff, "not later than three days before D-Day," the effective date of the cease-fire.

The U.N. chief said that Iran and Iraq would send representatives to Geneva to negotiate a settlement to the war, which has claimed some 1 million casualties since it began in September 1980.

In the Iraqi capital of Baghdad, thousands of people poured into the streets in celebration late Monday after the General Command of the Armed Forces announced the cease-fire date.

Crowds danced in the streets, while other people fired guns into the air, honked car horns, set off fireworks and chanted "Long Live Iraq!" and "Long Live President Saddam Hussein!"

The Iraqi announcement said the news was "a great victory for Iraq and for the Arab people," and Hussein declared the next three days as public holidays.

Iran's commander-in-chief said Tuesday his country would not initiate any more military actions against Iraq but told soldiers to maintain their vigil against possible enemy attacks.

"The armed forces should not, from today, be the initiators of any kind of military and armed moves," said Hashemi Rafsanjani, acting commander of the Iranian forces and also speaker of Parliament.

"But just like always, (Iran) will be ready to give an appropriate response to the mischiefs of the enemy," he said in a statement broadcast on official Tehran radio.

Only at 7 a.m. Tuesday, by way of Tehran Radio, did most Iranians learn of the cease-fire.

Perez de Cuellar estimated the cost of the U.N. observer force for the first six months at $74 million.

A unique feature of the observer force will be a naval contingent _ the first in the history of U.N. peace-keeping missions _ to patrol the disputed Shatt-al-Arab waterway, the estuary of the Tigris and Euphrates rivers separating Iran and Iraq at the northern head of the gulf.

In Washington, Defense Secretary Frank Carlucci said Tuesday the United States will withdraw most of its naval forces from the Persian Gulf only when it is convinced a cease-fire has taken hold.

"I would think we'd have to wait until the cease-fire actually takes hold, and probably after that a prudent period to make sure that it stays in effect," Carlucci said on NBC-TV's "Today" program.

"We have no desire to keep our ships, our people, there any longer than necessary. At the same time, we don't want to put them in any danger," he said in a separate interview on "CBS This Morning."