Saudi Arabia and its Persian Gulf allies pledged Saturday to participate in direct talks with Israel, breaking what Secretary of State James Baker called a "major taboo" that has thwarted peace efforts in the Middle East.

Baker announced the decision by the six-nation Gulf Cooperation Council to deal directly with Israel for the first time on secondary regional issues such as water scarcity and to send an emissary to observe the opening of peace talks with other Arab nations if they occur.President Bush on Saturday phoned Saudi King Fahd to thank him for the council's action, which the president said he viewed as a positive step, according to a White House statement.

"We think this is an important decision," Baker said upon his arrival here to begin a fourth round of shuttle diplomacy trying to set up a regional peace conference in the aftermath of the Persian Gulf war.

"It demonstrates that the Arab governments will attend the conference," he said. "We will break at least one major taboo in the sense that we will have Arab states sitting down and negotiating with Israel."

However, the Saudis and their council allies - Kuwait, the United Arab Emirates, Qatar, Oman and Bahrain - did not budge in their resistance to negotiating a peace agreement with Israel.

They will not be at the table for any direct negotiations on ending the 43-year Arab-Israeli dispute. The bargaining is to be conducted on the Arab side by Jordan, Syria and the Palestinians.

The announcement was distributed in English and in Arabic to reporters traveling with Baker. The observer who would attend the ceremonial opening of the conference is Abdulla Bishara of Kuwait, the secretary-general of the Gulf Cooperation Council.

The council said in a statement that its member nations wanted "to put an end to the Arab-Israeli conflict and to reach a just solution to the Palestinian question."

All six countries would participate in the "working groups" dealing with water problems, weapons proliferation and the environment, it said.

In Jerusalem, the Israeli Foreign Ministry had no immediate comment. But a senior Israeli official, reached by telephone, said the idea of the Saudis joining a second stage of talks on regional issues "was always in the air."

Until now the Israelis have been told the Saudis have only said "maybe" to the plan, said the official, insisting on anonymity. "This would be different, it would mean a yes," he said.

The development was the first bit of good news to U.S. officials trying to initiate peace talks since Baker's last trip to the region two weeks ago ended in disagreement over the formula for holding a conference.

Baker begins his talks here Sunday with Syrian President Hafez Assad. The hard-line Arab leader is insisting on a role in the negotiations for the United Nations and on reclaiming the Israeli-occupied Golan Heights.

Israel, mindful of lopsided votes against it at the U.N. and almost daily attacks on the Galilee before it seized the Golan Heights in the 1967 Six-Day war, is resisting both demands.

Baker will go from Syria to Egypt, Jordan and Israel. He will meet in Cairo Sunday with Soviet Foreign Minister Alexander Bessertnykh, who is concluding his own tour of the region.