The Soviet Union Friday recognized the proclamation of an independent Palestinian state but stopped short of extending full diplomatic relations.

The Soviet action, announced at a hastily called news briefing by First Deputy Foreign Minister Alexander Bessmertnykh, appeared to be a cautious step between Soviet support for the Palestinian cause and its effort to improve relations with Israel."Faithful to the fundamental principle of freedom of choice, the Soviet Union recognizes the proclamation of the Palestinian state," Bessmertnykh said.

He said the Soviet Union believed a comprehensive settlement of the Arab-Israeli conflict "will lead also to the practical completion of the historic process of creating this state."

Asked whether his announcement amounted to recognition of the Palestinian state, Bessmertnykh said "in essence," it did.

But a Foreign Ministry spokesman, Boris Savastyanov, said later in a telephone interview that it did not entail immediate exchange of diplomats and full diplomatic relations.

"That requires additional work," he said, adding that he could not speculate on when it might occur.

The Palestine National Council, meeting in Algiers on Tuesday, declared an independent Palestinian state. The council is the policymaking body of the Palestine Liberation Organization and is considered the Palestinian parliament-in-exile.

In Nicosia, Cyprus announced its recognition Friday of the proclaimed Palestinian state, bringing to at least 26 the number of countries to extend diplomatic ties.

The declaration in Algeria did not define the boundaries of the Palestinian nation, saying it would be determined by future negotiations. But the council accepted U.N. Resolution 242, which implicitly recognizes Israel, along with other U.N. resolutions, including one calling for Palestinian self-determination.

The Soviet Union's recognition of the proclamation of the Palestinian state comes as the Soviets continue to pursue a gradual thaw in relations with Israel.

The Soviet Union severed diplomatic relations with Israel in 1967 after that year's Middle East war. It has backed the PLO under Yasser Arafat and supported Arab demands that Israel give back occupied territory.

But the Soviets also have tried under President Mikhail Gorbachev to improve ties with Israel. Low-level delegations have exchanged visits and the Soviets have loosened some restrictions on Jewish emigration.

Cyprus became the second state with relations with Israel to recognize the new Palestinian state. The PLO already has a mission with diplomatic status in Nicosia.

Turkey is the only other country that recognizes both Israel and the Palestinian homeland. The Israeli Foreign Ministry summoned the Turkish charge d'affaires on Wednesday to criticize the move.

In Australia, Prime Minister Bob Hawke on Friday ruled out Australian recognition of the new state but said it represented a positive step in Middle East politics.