It's the new Disco Society, a long time and a long distance away from New York's Cafe Society, but no different for all that.

Le Palace is the Stork Club of the '70s hedonists. Palace owner Fabrice Emaer is the latter-day Sherman Billingshey.

But where money and fame were the criteria for acceptance in those earlier days, the current standard is style. Money, of course, helps, but it is hardlyde rigueur.

The setting has moved from clubs to discos. "You don't need to be rich and smart to get in (to discos)," sniffs Disco Society superstar Loulou de la Falaise. "I hate clubs," she says. "You never meet anyone new." On the disco scene, "You can be a spectator or an actor, and you don't have to say "hello darling' to anyone."

The disco stars are fashion designers. And their closest friends. And the artists. And the groupies. Karl Lagerfeld, the 39-year-old designer, Paloma Picasso Lopez, daughter of Pablo and pal of Lagerfeld and Yves Saint Laurent, as well as Loulou de la Falaise Klossowski, a Saint Laurent assistant and a part of YSL's inner circle, are the core of this nighttime world.

The Big Events are costume balls. Costume, of course, is the great equalizer. A year ago it was a birthday party for Lagerfeld at the Club Le Main Bleu and the dress was black leather and punk, the guests rangi ng from streetsweeper to royalty, the mood aggressive and frightening.

Over the past year designer Kenzo and his friends would hit the disco scene dressed in drag creating their own kind of setting at Le Palace. Then came Loulou "angel" party six months ago: She required her guests to come as angels and she turned up as the devil. Loulou and Paloma would dress in costume even when there was no "party."

Proclaims Lagerfeld, "The standards of what is chic and not chic are not the same anymore. Who cares if you are a rich banker's wife and put all your money in ugly jewelry. They (the rich) trip on their money. They want to be entertained, but no one want to entertain them. So why bother.They are not amusing. I don't know if we are either, but we are alive."

Balls are affordable again because disco owners help pick up the tab - in part because of the attendant publicity, but also because they are friends of the group. Says Emaer, who helps with two parties a year at his club, "Everyone loves to wear a costume, to have a different life for the evening."

"It's pretty boring when everyone is in tuxedos and pretty dresses," says de la Falaise. "Costume parties are more fun for those with less money. It is not only the rich who are the most beautiful. Everyone loves to stick a feather in his head."

So to celebrate the end of the fashion collections, Lagerfeld and Emaer, with the help of Picasso and de la Falaise, organized a party for 2,000 (or more) people who like to go to costume parties at Le Palace. Invitations were printed on the back of a mask - "I thought people were less likely to lose the invitation if they wore the mask," said Lagerfeld, and the suggested dress was "changing Venice."

"Of course that's his choice," laughed de la Falaise. "His last collection was Casonova. Imagine how easy it was for him."

It is the day after the successful Yves Saint Laurens collection and Loulou de la Falaise Klossowski, 31, part of the design team, has stopped by the couture house to put together a costume for the Lagerfeld party. She describes her relationship to Saint Laurent and her work as part of an inner circle "pushing, encouraging, discouraging about everything in the collection. If the jewels are pretty (one of her talents) it is because we all decided on it, like a family."

Costume parties, she says, break up the boredom of socila life in Paris today. "It is fun to dress up, to admire each other, to congregate our fantasies. It takes a lot of people to make a dressed up ball look dressed up, and a lot of time and effort."

The center of paris social life today are the fashion and theater people, she says. "The rich are afraid to show their money. They are frightfully worried about being broke or having it taken away," presumably by tax collectors.

It doesn't take a costume ball for de la Falaise to dress up. "I always like to be a fun vision. So when I go out I dress up. I don't mind if I am laughed or screamed at."

She wears a jacket from the couture collection, a pullover from a licensee, the belt and corduroy trousers of the ready-to-wear and, of course, a tassel necklace from the house, each in a different shade of blue or purple. She had been described as looking like a parrot. "I love color, she says. "But when I am tired, a beautiful black dress and makeup is the best." (Her Venice costume is similar mix of styles: a big taffeta skirt hiked up like pantaloons, velvet jacket from several seasons ago, a piece of the hat from an Opium promotion in New York, a scarf from the Broadway suit look.)

"What is important is to amuse people, whether they hate it or think it is ridiculous. If I gave up doing all this, and if Paloma did too, people would sink with boredom."

They came as cures and padres, courtesans and decadent contessas. Some had clearly raided the rental costumeries. Most were from the fashion world or at least related to it - hairdressers, decorators, models. Their costumes were trimmed and tasseled, sequined and feathered versions of their fantasies.

By midnight, when doors to the former theater, Le Palace, opened, there was a rush of moors and jesters. And for no apparent reason a bunch of men in leotards with bikini briefs worn over them.

There was a picture postcard salesman and a choreographed crew of 11 with a handmade and hand carried gondola with husky cabaret singer Gennie and decorator Eric Stark borne inside.

Lagerfeld made his costume from a Tiepolo painting in a rosewood-colored faille dress with satin and lace trim tricorner hat and a fan.

Few recognized him as he fanned himself with the stiff square fan on a long stick. "There are certainly many insecure people here hiding behind mask," he offered.

Hiding behind the construction of a rialto bridge, sparkling with Christmas lights, was Lagerfeld's pal, Jacques de Bercher.

Artist Fred Weissman kept sticking his head out from the neck of his handpainted, foam rubber dragon suit: "Nobody notices me unless I'm in masquerade," he admitted.

It was a great evening for spectators as well as those who dressed to be looked at. Men admired men in makeup, satin and feathers. Everyone primped in the wall mirrors as they cruised up and down the stairs.

For the women, the problems were serious. How to get someone off your skirt train. How to get through the crowd with big panniers, huge side skirt padding of the 18th century.

Emaer, who formerly owned the gayClub Sept, said he spent $80,000 turning the dance floor area into a Doge's Palace with red carnations, covered obelisks and carnation garlands crisscrossing the ceiling. A painted view of Venice served as a backdrop on stage for singer Esther Phillips and flame throwers. He wasn't sure just how many invitations went out, but estimated the crowd at 2,000.

If the guests didn't recognize Lagerfeld, Princess Saroya of Madame Sukarno of had difficulty spotting Kenzo in his white bishop's costume with mitred hat, there was no trouble when Rudolph Nureyev arrived at about 3 with his friend Douce Francois. He wasn't wearing a costume. Of course, as a legitimate, well-known star, he didn'e need one.

Paloma Picasso Lopez sits straight up, her hands folded in her lap, on the seafoam green satin and painted wood art deco sofa in the living room of her Left Bank apartment. The pale pink walls are bare except for a picture of her by Andy Warhol.

Yes, she says, she owns a Picasso portrait of her and it is in the other room. There will be many more when her father's estate is settled and she may hang up some but maybe not. "I don't know why, I just like an empty room," she says.

It is noon, the day after the big dress-up ball ar Le Palace. She left the party at about 3 a.m., she said. She's tired and that's the mood of her choice of a tweed jacket, turtleneck sweater and trousers. (Later for the photographer, she changes to the white spencer jacket from her wedding day costume, a tafetta shirt and black pants.)

Pamola Picasso, 29, is, with Loulou de la Falaise, at the center of the Paris Disco Society. Even though her only disco evenings are for private parties, even when dressing up is not called for, even when the event is not a disco, she is dressed in an extraordinary standout and will be spotlighted for her stylishness. It was true at the party at Club Sept celebrating the opening of the play "Success" in September. True for Valentino's new fragrance party, and true as she sat in the front row at the collections of Saint Laurent and Lagerfeld.

"Paloma's style is precise and strong: yellow and black," says de la Falaise. "I'm more untidy, more English, more like a fairy."

She pegs the start of the costume balls to a black leather party given by Karl Lagerfeld about the sane time a year ago at Le Main Bleu. "The collections (fashion showings) are the biggest event in Paris. There is no real show business here. This is the new show business," she says. So it's logical, she concludes, that a big lavish event would be linked to this time of the year.

Costume balls "obliged everyone to make an effort just to come," she says, admitting that the day before, when she had to concentrate on getting a costume together she thought that the idea was "just hell." She bought some letters in cork to spell out "Venise," took glue and sparkle to the hairdresser Carita to make up something extravagant to go with her 1950s black gown that had belonged to a friend of her mother's. (She buys and wears a lot of vintage clothes, always couture quality, in perfect condition and perfect fit.)

Years ago she designed furs for Jacques Kaplan. She also used to design costume jewelry and now wants to make the real thing, maybe in America. "The best craftmen are in France, but I need someone to sell the things for me. I can't do that,"

Her own style depends on her mood, when she gets up."Sometimes I get very dressed up just to go to the corner for some bread," she says. "It depends."

She knows and laughs about people poking fun her dress. "Sometimes I'm overdressed. It may bother others but not me. Once I put on my clothes in the morning I forget about them."

It is her hats that drive people crazy, she says. "It doesn't bother me. Idress for my own amusement." And a man in a hat, like her husband in his sombrero, gets even more glares.

The improtant thing, she says, is to feel good about what you wear "whether it is gold lame or a T-shirt and jeans."

or a headdress with the letters for Venice lighted up with sequins.

In New York last month, Valentino gave a party at Studio 54, with a circus theme, and no one came in costume.

Maybe it's our puritanism and our priorities, compared to the French. "Maybe Americans are just too busy for such things, "suggests Loulou de la Falaise.

Or maybe like Ralph Waldo Emerson says, "Society is a masked ball where everyone hides his real character and reveals it by hiding."