President Jose Azcona Hoyo said Nicaraguan troops are retreating from Honduran territory and the 3,200 U.S. soldiers on an emergency mission in Honduras probably won't be needed much longer.

Some of the American soldiers practiced military maneuvers at a Honduran airstrip only 20 miles from the Nicaraguan border on Sunday.Nicaraguan officials have denied their forces entered Honduras while driving Contra rebels out of the country in a major offensive that began March 8.

In Nicaragua Monday, the defense minister announced the Sandinista government was suspending all military operations during cease-fire talks with Contra leaders.

Defense Minister Gen. Humberto Ortega urged the Contras to halt their military activities. He called the three-day peace talks beginning Monday in Sapoa, Nicaragua "an historic encounter."

Contra leader Alfredo Cesar called the Sandinista proposal "constructive," adding "if they do this, then we also can take the same measures." He did not elaborate.

"Things are getting back to normal," Azcona said Sunday, one day after a Honduran air raid aimed at driving out about 600 Sandinistas that officials said were leaving Honduras too slowly. The government said two U.S.-made F-5 fighter jets fired rockets at the Sandinista troops.

Honduras said the air raid Saturday was eight miles inside its borders, but Nicaragua said it was five miles within its territory.

Nicaragua formally protested the Honduran air raid as an unwarranted act of aggression. It has denied that its troops crossed the jungle-choked border between the nations, and said the Honduran planes dropped bombs in the Bocay area of Nicaragua, 170 miles northeast of Managua.

"If there are no more incidents, the American will leave," Azcona said. He did not say when the U.S. troops, which began arriving Thursday, would leave nor did he further describe the Sandinista withdrawal.

A high-ranking Honduran military official said late Sunday that Honduras planned to position troops all along the 500-mile-long border with Nicaragua to guard against future incursions.

President Reagan ordered the U.S. troops in after he and Honduras said 2,000 Sandinistas had crossed the border.

Rep. G.V. Montgomery, D-Miss., a member of a congressional delegation that ended a fact-finding mission to Honduras on Sunday, said he expects the U.S. military personnel to pull out in about a week.

"I think it'll all be over by then," Montgomery, a member of the House Armed Services Committee, said at a news conference at Palmerola, headquarters for the American military operation in Honduras.

In Washington, the national security adviser, Lt. Gen. Colin Powell, also said the fighting was essentially over. Appearing on ABC-TV's "This Week With David Brinkley," Powell said the troops will return to the United States soon.

Peace talks between Contra rebel leaders and officials of the Sandinista government were scheduled to begin Monday in the southern border post of Sapoa, Nicaragua, 90 miles south of Managua near the Costa Rican border.

Victor Hugo Tinoco, deputy foreign minister in Nicaragua, said the talks will center on finding a way for the Contra rebels to lay down their arms. The government delegation will be headed by the nation's top military leader, Gen. Humberto Ortega, brother of President Daniel Ortega.

The Contras say the talks should include political issues.

Some in Congress say the Reagan administration, if it chooses to back a new Contra aid request, must confront doubts about the seriousness of the border clash.

"There is ... a very serious lack of full trust here," said House Majority Leader Thomas Foley, D-Wash.