Don Juan de Borbon, the direct heir to the Spanish crown, formally renounced his dynastic rights today in favor of his son, King Juan Carlos, in a ceremony brimming with emotion and political significance.

Don Juan, 63, prentender to the throne for 36 years, formally recognised his son as the legitimate king of Spain and successor to Alfonso XIII in a brief abdication speech in suburban Zarzuela Palace.

Juan Carlos, 39, replied that as king he was prepared to "respect the popular will" and that throughout his reign he would seek "liberty and justice" so the monarchy "will be the necessary element for stability in the nation."

The decision removed any doubt that the young king had no right to the crown because he was picked by the late dictator Francisco Franco, who did not trust the elder Borbon's liberal political ideas.Juan Carlos succeeded Franco 18 months ago.

Don Juan had made it clear that he would not yield his rights until he was certain that his son had established the basis for a representative democracy. During the king's brief reign his government has dismantled the worst features of the dictatorship, legalize political parties and scheduled the free parliamentary elections for next month.

"Long live the king," said Don Juan after calling his son "majesty" in a choked voice.

Not once was Franco invoked in an event intended to remove the shadow the dictator cast on the legitimacy of Juan Carlos. A political foe of Franco, Don Juan recalled that he was named heir to the crown by his father, King Alonso, in 1941.

Alonso had abandoned Spain in 1931, following elections that established the Republic, which was crushed by Franco's military victory in the 1936-1939 Civil War.

Today, Don Juan said that now that his son and heir had won popular acclaim at home and support aboard, "I believe that the time has come to pass to him the historic legacy I inherited."

Don Juan has lived in self-imposed-exile in Portugal for many years Franco refused to let him fight in the 1936-39 Civil War, and rejected all of Don Juan's subsequent bids for the throne.

The king today reconfirmed his father's title as Count of Barcelona. Monarchist sources said that Don Juan will probably come to live in Spain in the near future and receive large state pension.