Iraqi President Saddam Hussein asked his parliament Thursday to authorize the release of all foreign hostages, and Secretary of State James Baker said the development indicated that "diplomatic and military pressure" against Iraq is working.

It remained unclear whether the remaining 2,000 hostages would be allowed to leave as soon as the rubber-stamp National Assembly agreed to Saddam's request, but British officials in the region reportedly were preparing for an air evacuation of their captives.In a message to the parliament speaker, Saddam urged the body to "lift the ban on the travel of all foreigners whose travel abroad has been restricted and to make a decision to this effect," according to the Iraqi News Agency, monitored in Cairo, Egypt.

Western diplomats in the Middle East said about 2,000 Western and Japanese hostages are still in Iraqi custody. Iraq already has released many groups of hostages and recently agreed to allow 3,300 Soviet captives to leave.

Saddam reportedly acted at the suggestion of three of his few remaining allies, Palestine Liberation Organization Chairman Yasser Arafat, Jordan's King Hussein and the vice president of Yemen.

Under a U.N. Security Council resolution passed Nov. 29, Iraq has until Jan. 15 to withdraw from Kuwait, which it invaded Aug. 2, or face possible confrontation with the U.S.-led multinational force arrayed against him in the Persian Gulf.

During a hearing of the House Foreign Affairs Committee on Thursday, Baker said the report is "a welcome and significant development, but we do want to see it actually happen."

He added that "it does not lessen nor should it lessen our determination that Iraq's aggression against Kuwait must be reversed by full implementation of all of the Security Council resolutions."

"I think that this is a sign that strategy of diplomatic and military pressure is working," Baker said.

President Bush was informed of Thursday's developments while flying from Buenos Aires, Argentina, to Santiago, Chile. His spokesman, Marlin Fitzwater, said, "It shows (Saddam) realizes his position, that taking hostages has incurred the outrage of the world. It is a hopeful sign."

European leaders expressed cautious optimism and said they believed the Iraqi pledge lessened the chances of war."I'm tense, I'm hopeful, but I'm cautious," said Robert Hayward, a British member of Parliament. Gerald Kaufman, the British Labor Party's shadow foreign secretary, said the release demonstrates that "Bagh-dad may be coming to its senses."

A spokesman for German Chancellor Helmut Kohl said the possible release means one of the most important conditions for solving the Persian Gulf crisis had been fulfilled, but he emphasized that "the issue is not finished yet."

A spokesman at the Kuwaiti Embassy in London said, "Let's hope this is a prelude to him (Saddam) leaving Kuwait altogether."

Egyptian Foreign Minister Esmat Abdel Meguid said the main issue is that Iraq must withdraw from Kuwait and restore the emirate's legitimate government.

Relatives of the hostages remained cautious.

"We'll celebrate when we see them coming out and not before. At my age, you learn to have a little equanimity about these things," said Margaret Williams, whose son and daughter-in-law were working in Kuwait when Saddam's troops invaded.

The couple's daughter, Jennifer Williams, was among a group of about 20 Americans who, against State Department recommendations, traveled this week to Baghdad to seek their loved ones' release.

"You can't give up hope - there's always hope," Margaret Williams said from her home in Germantown, Tenn. "But this could well be just another one of (Saddam's) cat-and-mouse games."

The Iraqi move came as Iraq and the United States prepared for top-level talks on achieving a peaceful solution to the 4-month-old standoff. Baker will travel to Baghdad to speak with Saddam, and Iraqi Foreign Minister Tariq Aziz will meet with Bush in Washington.

It also came as the United States was reported to have proposed to the permanent members of the U.N. Security Council that they arrange a Middle East peace conference. Iraq has called for its invasion of Kuwait to be linked to the Palestinian issue.

The Soviet Union and several European states have long called for an international conference on the Palestinian issue, but Israel and the United States, Israel's chief ally, have preferred to see Middle East peace talks take place on a bilateral basis similar to the Camp David Egyptian-Israeli accords 11 years ago.

One report said the United States had agreed to call the peace conference as a reward for the pro-Kuwaiti stance of Syria and more moderate Arab states such as Egypt and the Arab nations of the gulf. The U.S. move also could be seen as a concession to the Soviet Union, which has helped hold the anti-Iraq alliance together.

Asked about the reports at the House hearing, Baker said, "We have not in any way shifted our position on an international conference."