REBELS FREE 20 IN PERU.

Byline: Clifford Krauss The New York Times

Marxist rebels released the ambassadors of the Dominican Republic and Malaysia and 18 other hostages Saturday after a Peruvian cabinet official entered the residence of the Japanese ambassador in what appeared to be the first direct contact between the rebels and the government.

Dressed in business suits and looking surprisingly refreshed and composed, the freed hostages hugged one another as they left the residence, then waved to other hostages who watched from the second-floor windows. In a communique, the guerrillas of the Tupac Amaru Revolutionary Movement said the release of 20 of their remaining 103 hostages - most of whom were Japanese businessmen and low-level Peruvian diplomats - was designed ``as a gesture of goodwill.''

It was the largest hostage release since the rebels freed 225 people Dec. 22. The rebels have now sporadically released more than 450 people since they stormed a diplomatic party given by the Japanese ambassador in honor of the emperor of Japan on Dec. 17, and their remaining captives include the ambassadors of Japan, Honduras and Bolivia.

The government remained silent about what the cabinet official, Education Minister Domingo Palermo, said to the rebels during his four-hour visit to the compound, and there was no suggestion that any government concessions had been promised. But Palermo appeared in lofty spirits walking beside Bishop Juan Luis Cipriani as the two left the residence late in the afternoon, and Ambassadors Jose Diaz Valdepares of the Dominican Republican and Ahmad Mokhtar of Malaysia were freed less than 20 minutes later.

Diaz Valdepares suffers from diabetes, and he was considered a potential health problem for the rebels. Mokhtar was released only a day after Malaysian Foreign Minister Abdullah Badawi left Peru following a three-day visit, but there was no immediate indication that a separate deal was reached between the rebels and the Malaysian government for his release.

The freed hostages were driven by bus to a National Police hospital for physical examinations.

President Alberto Fujimori appointed Palermo as his representative at the beginning of the crisis, and the education minister has met regularly with Michel Minnig, the Red Cross representative who shuttles daily between the compound and government offices.

But Palermo's entrance into the compound shortly before 1 p.m. was the first time he or any other government representative had entered the building since the hostage-taking. The very fact that he did not fear being taken hostage himself demonstrated that the government and rebels had reached some kind of understanding, at least to talk.

Fujimori has spoken publicly only once since the crisis began almost two weeks ago, and he has refused to negotiate. He has called on the rebels to drop their arms and release every hostage, and he said that only then would the government consider safe passage for the guerrillas. For their part, the Tupac Amaru hostage-takers have demanded the release of more than 300 of their comrades now held in Peruvian jails and safe passage to a haven deep in the Andes.

Up to 20 guerrillas still hold the three ambassadors, along with more than 20 senior Peruvian military and police officers, two cabinet members, several Supreme Court judges and five congressmen.