With emotional tributes that drew thousands, the city -- whose leaders say they owe him so much -- honored the birthday of the Rev. Martin Luther King Jr. yesterday and jubilantly celebrated a new federal holiday dedicated to his memory.

"Happy Martin Luther King Jr. Day," a beaming D.C. Del. Walter Fauntroy told an overflow crowd of King admirers at the District's downtown Convention Center, where city officials held a special two-hour birthday observance. "I have waited 18 years to say 'Happy Martin Luther King Jr. Day.' "

The program, one of several King tributes held throughout the city during the day, attracted more than 3,500 people, many of whom had to watch the event via closed circuit television in an adjoining room. Others who couldn't get into the program milled around in hallways or stood outside in the cold.

Fauntroy spoke of how King's "life and work impacted on national policy" and reminded the audience that national policy once permitted 11 states to practice racial discrimination and segregation against blacks.

And just as he had watched presidents sign legislation that changed national policy here, Fauntroy said, those loyal to King's legacy were now working to change the racial policies in South Africa.

The notion of honoring King by continuing the civil rights and peace struggles he led was a repeated theme of yesterday's birthday activities. Amid poignant or humorous reminiscences from the 1960s, there were harsh challenges for the present.

"Most of us in this room probably would not be where we are if it were not for Dr. King and the civil rights movement," said Mayor Marion Barry, who first met King in 1960 during student protests against racial discrimination in Nashville.

But then, reciting continued problems with poverty, drug abuse and racism, both at home and in South Africa, the mayor said this was no time to stop what King started.

"Let's not just sit and relax and have a good time and feel good about this," Barry said.

After the Convention Center program, where musical performances brought the audience to its feet more often than speeches, Barry, walking with his wife Effi and hoisting their son Christopher, 5 1/2, on his shoulder, led the crowd in a short march to the Martin Luther King Memorial Library.

Fauntroy, City Council Chairman David A. Clarke, most members of the City Council and other officials joined Barry at the front of the line.

The marchers, many wearing buttons or carrying placards and banners, began singing "We Shall Overcome" as they neared the library, where their voices blended with those of several hundred others awaiting the official unveiling of a 56-by-7-foot mural depicting King's life. Again, those who couldn't get inside the library waited outside in the cold drizzle for a chance to see the mural later in the afternoon.

All federal, District and Virginia government offices shut down yesterday for the King holiday, which Maryland state offices observed on Jan. 15, his actual birthday. For most private sector firms and shops, however, it was business as usual.

In the District, which has been honoring King on his birthday for the last 17 years, the day began with church services and a memorial breakfast sponsored by the United Planning Organization. Anacostia residents held their eighth annual Martin Luther King Jr. parade.

But in a day highlighted by tears and laughter in remembering King, there were also some minor glitches, remarkable ironies and political overtones.

Barry, for instance, sharing the stage with several potential political rivals, was introduced by Polly Shackleton (D-Ward 3) as "the present and next mayor of the city." He thanked her for both introductions.

An earlier Shackleton introduction got one of the biggest laughs of the day when she accidentally announced that a musical group, In Process, was about to perform Acapulco -- when she meant a cappella.

The South African Embassy, the focus of most of the antiapartheid demonstrations of the past year, closed for the day in honor of King, according to a spokesman there.

The printed program for King observances at the Convention Center twice incorrectly listed the date of King's birthday, Jan. 15, 1929. One page had him born in 1919 while a copy of the official mayoral King holiday proclamation listed his birthday as 1928.

And as the day's events stretched into the afternoon, Effi Barry drew some giggles among the audience at the library ceremonies. Sitting front row center on the stage and coping with an increasingly restless and apparently hungry son, she brought out a banana from which they both lunched.

But one "mistake" turned out to be a real crowd pleaser when Broadway star Jennifer Holliday took the microphone at the Convention Center to sing what the program said would be "The National Anthem."

After a hurried consultation, the introduction was revised, and Holliday launched into a joyous rendition of "Lift Every Voice and Sing," a song often referred to as the "Negro National Anthem."

The convention center audience loved it, demanding and singing along with several encores.

"I was asked to sing the National Anthem," she explained. "Well, my national anthem is 'Lift Every Voice' so I guess I made a mistake."

The program at the King library's mural unveiling also included music and was equally upbeat.

"The mural belongs to the community," said Nora Drew Gregory, who headed the project for the library.

Artist Don Miller, with his wife, mother and other family members looking on, said it took 23 months to plan and paint the mural, which stretches across the back wall of the library's lobby. It includes scenes from King's life and civil rights protests and features likenesses of many who joined King in those demonstrations, including Barry and Fauntroy.

"I hope that it will be here as an inspiration to others as it was to me while painting it," Miller said. "It's an outstanding monument to a fantastic man."