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President Reagan and Soviet leader Mikhail Gorbachev met Saturday in a little white house by the sea for their first face-to-face effort in 11 months to break the superpower impasse over nuclear weapons, human rights and other issues.

The President, smiling and waving to reporters, arrived for the meeting 7 minutes early. A reporter shouted, ”Are you going to give away the store?”

and Reagan replied, ”I don`t own the store.”

Gorbachev arrived just a minute before the scheduled atart of the meeting and shook hands warmly with Reagan on the steps of Hofdi House, an Icelandc government guest house where they were to meet.

The President apparently made a reference to the time because the Soviet leader looked at his watch and shrugged apologetically.

Reagan went into the talks feeling his position had been bolstered by a last-minute agreement with Democratic leaders in Congress to lift legislative restrictions on key elements of his defense and arms control policies.

”This strengthens our hands with the Soviets in presenting a united front,” White House spokesman Larry Speakes said in announcing the agreement on the eve of the summit.

By publicly trumpeting the agreement in advance of the meeting, the administration appeared to be trying to give Reagan a psychological edge in his encounter with Gorbachev.

Reagan, facing criticism at home and abroad over U.S. refusal to join the Soviets in a moratorium on nuclear testing, went on the offensive at the summit on that issue.

Speakes said he was prepared to move toward a limit on nuclear tests in exchange for Soviet concessions on verification of such an agreement.

Reagan and Gorbachev are scheduled to conclude their talks Sunday. Speakes announced the President would make a televised report to the nation Monday night, a possible indication that the U.S. expects some concrete achievements at Reykjavik.

He said it was undecided whether the speech would come from the White House or would be made to a joint session of Congress.

The meeting here is supposed to be a prelude to a full-scale Reagan-Gorbachev summit in the United States later this year, but U.S. officials said they did not expect agreement here on a summit date.

The leaders of the world`s two most powerful nations chose an unusual venue for their talks–a modest, two-story house in a remote island nation that never before has played such a prominent role in world affairs.

Hofdi House is on the fringes of downtown Reykjavik. The simplicity and almost cramped size of the house appeared tailor-made to ensure a business-like tone to the proceedings.

After sitting down for the benefit of photographers in a room overlooking Reykjavik`s harbor, Reagan and Gorbachev moved to an adjoining room to begin their talks with just their interpreters and note-takers present.

The two leaders faced each other across a small table with a lamp in a corner of the room, took coffee together, then got down to business. A patterned wool rug covered the floor of the room and the walls were adorned with landscape paintings by Icelandic artists.

On the floor above, senior American and Soviet advisers waited in separate rooms and were expected to be invited to join the talks at various stages.

Rozanne Ridgway, U.S. assistant secretary of state for European affairs, said it was likely each of the leaders would make a broad opening statement.

After that, she said, ”the conversation will go in the direction they want it to go, and the order in which issues are considered will flow as they want it to flow.”

White House sources said the agenda called for talks to focus on arms control in the morning, then switch to human rights in the afternoon. But they said the first summit in Geneva last November showed that the leaders do not adhere strictly to such a division of subjects.

U.S. officials denied the focus of the talks would be on arms control alone. They said Reagan was determined to raise the human rights issue, especially as it relates to the plight of Soviet Jews denied permission to emigrate, and regional conflicts such as Afghanistan.

Since August, the President has complained that the Democrat-controlled House was undercutting his bargaining position with Gorbachev by imposing restrictions on key defense programs.

After weeks of negotiations on this topic, House Democrats agreed Friday to drop four of the five major restrictions they had attached to a catch-all spending bill.

These included a freeze on funding for Reagan`s Strategic Defense Initiative, a ban on production of chemical weapons, a halt to nuclear tests and a requirement that the President continue adherence to the unratified 1979 SALT II treaty.

The only restriction the House kept in place was a ban on final-stage tests of antisatellite weapons.

Speakes said the House decision ended a dispute that had ”threatened to give General Secretary Gorbachev the false impression of a divided America.” He said the President was grateful for ”this show of unity,” which would enable him to make clear to Gorbachev that the onus now is on him to resolve the verification problems with two nuclear test limitation treaties agreed on in the 1970s.

The treaties in question are the 1974 Threshold Test Ban Treaty and the 1976 Peaceful Nuclear Explosions Treaty, both of which limit the size of weapons used in underground tests.

The first treaty was concluded shortly before President Richard Nixon left office in the Watergate scandal, and the second arose out of the summit meeting in Vladivostok between President Gerald Ford and Soviet leader Leonid Brezhnev.

Speakes said Reagan would inform Gorbachev that he is prepared to push ahead with ratification of the two treaties if the Soviets would first agree to procedures for verifying compliance with their provisions.

The President also planned to tell Gorbachev that once the treaties have been ratified, U.S.-Soviet negotiations should begin on limiting and ultimately ending nuclear testing if the two sides at the same time move toward reducing and later eliminating nuclear weapons.

Reagan had a final meeting with his senior advisers Saturday after breakfast, then met Gorbachev at mid-morning. Each of the two sessions of talks Saturday was scheduled to last two hours.

Speakes said the 75-year-old Reagan was not tired despite having only one day to adjust to a different time zone. Reagan arrived here Thursday evening and the White House sought to stave off presidential jet lag by having him arise early Friday after 1/2 hours of sleep.

After a hearty breakfast, he met several times during the day with his advisers and paid a brief courtesy call on Icelandic President Vigdis Finbogadottir. She exchanged champagne toasts with him, then took him on a short walk near her residence to show him the sweeping view of Reykjavik and its harbor.

Reagan retired early after dinner with aides at the residence of the U.S. ambassador. On Saturday, he was to lunch with the aides and have dinner with them to review results of the first day of talks.

Unlike Gorbachev, who brought his wife Raisa with him, Reagan traveled without his wife Nancy.