Soviet Jews sang Hebrew folk songs and danced in celebration Thursday as Israel reopened its consulate in Moscow after a 23-year rupture in diplomatic relations.

The newly appointed consul general, Aryeh Levin, said the consulate's reopening reflected the growing warmth in Soviet-Israeli relations and was a major step toward restoring full diplomatic ties, which the Soviet Union cut after the 1967 Arab-Israeli War.More than 100 Soviet Jews, diplomats and journalists gathered for the ceremonial raising of the blue-and-white Israeli flag in a snowy courtyard outside the consulate, a plain yellow masonry building that was the Israeli Embassy before 1967.

Since relations were severed, the building in central Moscow has been cared for by an Israeli interests section of the Dutch Embassy. Levin came to Moscow more than two years ago as head of an Israeli delegation and stayed on as relations improved under President Mikhail S. Gorbachev.

After the flag raising, a dozen Soviet Jews joined hands for the hora, a traditional Jewish circle dance. Many said they hoped to move to Israel.

"Things have changed here on the surface in the last few years, but psychologically they haven't changed - the attitude toward Jews is the same or maybe even worse than before," said Anya Yagudina, 51, explaining why she wants to emigrate.

Levin said he believed the Soviet government had softened its position on diplomatic ties since last summer when Foreign Minister Eduard A. Shevardnadze indicated willingness to restore full recognition only if Israel agreed to an international peace conference on the Middle East.

Shevardnadze's proposal "has not been mentioned recently as a precondition, and I think the Soviet government has realized that the peace conference on the Middle East cannot be a step that Israel must absolutely take before relations are established. I think Soviet thinking has evolved on that issue," Levin said.

He said Israel is willing to restore relations immediately, but Soviet officials have hesitated.

"I think their problem is that they took a decision many years ago, and it is very difficult for them to undo this decision, so they're doing it bit by bit," he said.

Levin also said the Soviet Union has agreed to allow El Al, the Israeli airline, to begin direct flights between the two countries at the end of January. Initially, the weekly flights will carry only businessmen and tourists.

Before allowing emigrants to fly directly to Israel, the Soviet government has insisted Israel formally declare that they will not be settled in the occupied West Bank or Gaza Strip, Levin said.