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Exactly two weeks after a coup threatened the land with bloodshed and chaos, President Mikhail Gorbachev on Monday clinched a deal with leaders of 10 Soviet Union republics to create a loose confederation of sovereign states. The plan, which would shift most Kremlin power to the republics, allows Gorbachev to retain his title of president for the time being at least. He would continue to make decisions on the country`s defense and foreign affairs, but in conjunction with three newly created interim councils, until a new constitution is written.

The plan`s overall goal is to achieve the domestic stability that has eluded this nation throughout the perestroika era.

The deal Gorbachev cut, concluded early Monday after an all-night bargaining session, surprised many delegates at the opening session of an emergency Congress of People`s Deputies, the Soviet Union`s highest legislative body.

The president, his resolve stiffened by support from 10 of the 15 Soviet republics, in essence hijacked the agenda, limited debate and now seems likely to win approval by the time the congress adjourns-most likely forever-on Wednesday.

Although contentious debate is expected, conservatives could muster no more than 107 of the 1,900 delegates during a preliminary vote on whether to consider the proposal. It seems unlikely the ranks of hard-liners will swell after the disgrace of the right-wing political forces that backed the coup.

Although the Soviet Union remains in danger of splintering as republic after republic declares independence, the proposal outlined by Nursultan Nazarbayev, president of the Central Asian republic of Kazakhstan, guarantees something for everyone.

Republics remaining in the radically restructured union would receive the power to declare themselves independent, dictate terms of the relationship with central authorities in Moscow and control internal political and economic affairs.

In so doing, the republics would receive far greater freedoms than those originally envisioned under a treaty of union whose signing was aborted by the junta. These increased powers were the price demanded by the republics`

democratic leadership, credited with standing up to the junta and breaking the coup.

But realizing that grand aspirations for economic and political achievement flourish best in a stable environment free from nationalist and ethnic strife, the republics would grant Gorbachev`s wish that a nationwide political-military entity and economic commonwealth oversee this reconstituted union.

Thus Gorbachev would get his desire, which is to remain president-at least for now-of a political and economic grouping that encompasses the majority of the land area, population and republics of the nation once called the Soviet Union.

The new union contract asks that the breakaway Baltic republics of Latvia, Lithuania and Estonia sign a pact of economic cooperation with the remaining republics but makes no political claims on those three Baltic republics, nor on Moldavia or Georgia, which also declined to formally join the group of 10.

In fact, an official vote by the Congress of People`s Deputies on Baltic independence is expected before Wednesday.

”The situation that emerged in the country after the putsch, if it runs out of control, could lead to unpredictable consequences inside the country and in relations with foreign states,” said Nazarbayev, who has emerged as a spokesman for the new union because of his intellect and non-Russian ethnicity.

Under the proposal, Gorbachev and leaders of the republics would hurry to negotiate a new union treaty and a constitution. Meanwhile, the country would be run by three councils.

A legislative council would include 20 members from each participatory republic. An executive council would include the Soviet president and presidents of the republics. And an economic council would include

representatives from each republic.

Mayor Anatoly Sobchak of Leningrad, chosen to address the chamber on behalf of the Russian republic`s delegation, stressed the need to ”create these temporary structures of control to assure stability in this transition period.”

If approved, the program would mean that the current Soviet legislatures- the Supreme Soviet, which is the standing parliament, and the Congress of People`s Deputies-would be disbanded.

Although they were hailed as landmarks of democratization only two years ago, neither body has lived up to its potential or expectations, and only a tiny minority of the delegates probably would be re-elected if running for office today.

The new program calls for a national defense policy based on ”principles of collective security” and pledges that a ”radically reformed” army, KGB and Interior Ministry will conduct the union`s business ”in line with republican sovereignty.”

The new nation, whether it is termed a union, federation, confederation or commonwealth, will strictly observe all international agreements and commitments of the Soviet Union, including arms control treaties and foreign economic obligations.

Each republic would be able to apply separately to the United Nations for membership.

As the congress adjourned for a midmorning break, air force Col. Viktor Alksnis, the so-called ”black colonel” who leads the hard-line Soyuz (Union) faction, shouted from the hall:

”This is an attempt at an unconstitutional coup!”

Delegate Alexander Obolensky went further, and was the only member of the chamber who demanded Gorbachev`s resignation.

”We should stop treating the constitution as a prostitute, adjusting it to the lust of any new ruler,” he said, accusing Gorbachev and the republican leaders of setting up new organs of power without consulting the population.

”We have brought the country to the brink of ruin by our experiments with the constitution,” he said.

But as the chamber convened after lunch, leaders from 12 republics spoke in support of the plan to reform the Soviet Union.

Praising the plan were the 10 signatories to the document-Russia, Byelorussia, Ukraine, Armenia, Azerbaijan, Kazakhstan, Uzbekistan, Turkmenia, Kirghizia and Tadzhikistan-plus Moldavia and Georgia, whose representatives said they would consider joining an economic commonwealth once independence was confirmed.

Each used such boilerplate phrases to describe the plan as necessary to

”maintain stability,” ”bring tranquility” and the like, but old schisms still appeared.

Leaders from Armenia and Azerbaijan spoke of the need to respect the rights of independent regions, but nothing in the debate or in the document itself gave a concrete solution to the territorial disputes that result in almost daily bloodshed there.

In a symbol of solidarity for the power-sharing deal, Gorbachev entered the Kremlin`s Palace of Congresses walking alongside Boris Yeltsin, president of the Russian republic, who has emerged from the coup to rival Gorbachev for national power.

The two presidents took turns as chairmen of the afternoon session.

As the Congress of People`s Deputies convened in what is likely to be its final week of business, the usual image of Vladimir Lenin, founder of the Soviet Union, was removed from the backdrop. Instead, hung on a curtain were giant letters spelling out, ”Extraordinary Congress of People`s Deputies of the USSR.”

Those entering the Kremlin for the congress had to pass through a gantlet of protesters who shouted ”Shame on the Communist Party!” indiscriminately at party members, reformers, diplomats and journalists alike.