PLO officials were delighted Thursday with the U.S. decision to begin diplomatic talks with the organization, and PLO headquarters in Tunisia got its first call from the U.S. envoy chosen to work with them on seeking peace with Israel.

The Palestinians credited their people's uprising in Israel's occupied lands for gaining their cause worldwide sympathy and leading to the end of U.S. isolation.Electrified by the U.S. announcement, they laughed and embraced in the lobby of the Geneva hotel where their delegation was staying as they discussed the long-awaited development with reporters.

PLO spokesman Ahmed Abdel Rahman said the U.S. decision meant "a historic change in the struggle in the Middle East."

The White House's reversal came after PLO chairman Yasser Arafat told a news conference in Geneva on Wednesday that he renounced "all forms of terrorism" and recognized Israel's right to live in peace and security.

Hours later, President Reagan said the United States would begin a dialogue with the PLO. Secretary of State George P. Shultz said the PLO had finally met U.S. criteria for negotiations.

Indeed, the envoy authorized with initiating contact with the PLO made a brief phone call Thursday to PLO headquarters in Tunisia. A spokesman for the ambassador, Robert H. Pelletreau Jr., had no further details.

No date has been set for the talks, but a State Department official in Washington, speaking on condition of anonymity, said: "We're sure the PLO will try to have them take place as soon as possible."

Arafat was in East Berlin Thursday for what the state-run ADN news agency said was a working visit and met with the German Democratic Republic Communist leader Erich Honecker. He later left for Bucharest, Romania, the agency said.

ADN quoted Arafat as telling Honecker "the PLO is striving for a comprehensive settlement of the (Middle East) conflict that would guarantee to all those involved a life in dignity, freedom and peace."

U.N. Secretary General Javier Perez de Cuellar welcomed the U.S. move as "excellent news" and said it created "much more favorable" conditions for the United Nations to call an international peace conference including the PLO.

The U.N. chief's spokesman, Francois Giuliani, said he would return to New York on Friday to begin consultations aimed at speeding up the peace process.

Rahman said the U.S. decision means peace is near in the Middle East.

"After 40 years of struggle and wars, we can speak about an era of peace in the Middle East, peace for all, the Palestinians, peace for us and our enemies," he said.

Israeli officials were shocked.

They said Arafat's remarks were insufficient because the PLO did not rule out violence associated with the Palestinian uprising, which began Dec. 8, 1987, in the occupied West Bank and Gaza Strip and has claimed the lives of 323 Palestinians and 13 Israelis.

On Tuesday, Arafat told the U.N. General Assembly in Geneva that the PLO accepts "the right of all parties concerned in the Middle East conflict to exist in peace and security, and as I have mentioned including the state of Palestine, Israel and other neighbors."

He also said the PLO accepted U.N. resolutions 242 and 338, which recognize the right of all Middle East nations to safe and secure borders.

That acceptance was one of three conditions set by U.S. law for dialogue with the PLO. The others were a clear recognition of Israel and renunciation of terrorism by the PLO.

In Jerusalem, Foreign Minister Shimon Peres said his country should launch a peace initiative of its own to counter the PLO's latest diplomatic achievements. He proposed letting Palestinians in the occupied lands elect alternative leaders to negotiate peace with Israel.

Shultz said Wednesday night that the United States "does not recognize the declaration of an independent Palestinian state," made by the PLO in Algeria last month but that it would be a subject of discussion.

The U.N. meeting in Geneva, scheduled to end Thursday, was held in Switzerland after the United States refused to grant Arafat a visa to speak at U.N. headquarters in New York.