Mikhail S. Gorbachev Thursday agreed to work harder with Japan to reach a formal World War II peace treaty, including a resolution of a territorial dispute over four Soviet-held islands off northern Japan.

Gorbachev's concessions, however, fell far short of the conditions Japan had set in order to give major financial aid to the faltering Soviet economy.The Soviet president and Japanese Prime Minister Toshiki Kaifu met for one hour and 40 minutes late Thursday to work out a joint statement that capped the first visit to Japan by a Soviet leader.

They then moved to another room of the rococo-style state guest house in central Tokyo for the signing of the communique and 15 documents on topics from Japanese technical assistance for perestroika, Gorbachev's economic reform program, and aid to victims of the Chernobyl nuclear accident.

Throughout Gorbachev's trip that began Tuesday, it has been clear that he and Kaifu would not reach a comprehensive settlement on ownership of the four tiny islands in the Kuril chain. The islands were seized by Moscow in the closing days of World War II.

At Japan's insistence, the joint communique made a reference to an unfulfilled 1956 agreement under which the Soviets would hand over the two smallest islands, but did not commit Moscow to handing them back.

It did, however, commit them to work harder toward a World War II peace treaty that would include a settlement of the territorial issue.

The communique also said the two countries agreed to "promote mutual relations" in trade and other economic areas but did not say how much aid the Soviets would get from Japan, the world's No. 2 economic power.

Moscow also proposed allowing Japanese to visit the islands without visas and reducing the Soviet military presence, estimated at 11,000 soldiers, on the islands.