In a colorful ancient ceremony commingling this proudly independant island's Celtic, Norse and British heritage, Queen Elizabeth II presided here today at the comemoration of at least 1,000 years of the world's oldest continous Parliament.

Repeating an annual ritual possibly dating back before 1979, the year arbitrarily picked in marking the Isle of Man millenium, officials of the mostly self-governing crown possession gathered with queen on a grassy man-made mound near the middle of the hilly island to formally promulgate laws enacted during the past year.

The open-air meeting, called Tyawald, was begun in the 9th or 10th century by Norse invaders who colonized the Celtic island between Britain and Ireland in the Irish Sea. Tynwald is now conducted both in Manx Gaelic, the language of the Celts who were subdued but never culturally dominated by the Norsemen, and in English, the language of the island after it became a crown possession in the Middle Ages.

Although related to similarity ancient legislative gatherings in Norway and Iceland, Tynwald is a peculiar to the Isle of Man as its tailless Manx cats, four-horned sheep and national flag, which contains three rotating human legs on a blazing red field. Tynwald is always held on July 5, midsummer in the old Norse calendar.

Today, the island's legislators, judiciary, senior civil servants and clergy - including the Anglican bishop of Man, the smallest diocese in the United Kingdom - dressed in black robes and uniforms trimmed with scarlet or gold, marched with the queen from a small church across a path strewn with green rushes to the Tynwald Hill. Its ascending tiers of circular lawns were surmounted by a conical white tent around a gleaming metal flag pole.

After everyone assembled on the hill - with the queen, as Lord of Man, at the top under the tent and the flapping Manx flag-wigged senior judges called deemsters read summaries of this year's new laws in Manx and English. As is customary, petitions were then accepted from citizen delegations.

"If any persons wish to present a petition for redress, let them come forward now," the queen announced to the crowd of nearly 10,000 including islanders, visitors of Manx descent from as far away as the United States, Canada, Australia and New Zealand, other tourists and newsmen from around the world.

The four petitions handed up to her for later consideration by the Manx Legislature complained about taxes, local train service, a nuclear plant 40 miles across the Irish Sea in Britain, and a proposed ban, under pressure from the European Court of Human Rights, on birching as punishment for youthful violent offenders. A large number of Manx traditionalists want to keep birching, at least for offenders over 21. About 130 convicts have been wiped on Man in the last 26 years.

The annual color and pageantry of Tynwald was enhanced this year by the pomp of the queen's visit. Accompanied by red-coated palace guards, pipe and drum bands and 400-horse cavalry, she traveled in a ceremonial horse-drawn coach to Tynwald Hill in the town of St. John's, where she was greeted by a 21-gun salute.

The two legislative branches of the Tynwald, the lower House of Keys and the upper Legislative Council, make and administrate most Manx laws, subject to the very rare veto of the crown's governor-general.

Eighteen years ago, they cut the island's income tax rate to well below Britain's to pull the island out of persistent depression. New businesses, "off-shore" branches of British financial and insurance firms, arrived as well as well-off-retirees from Britain and its old colonial Empire, and wealthy "tax exiles," such as "Watership Down" author Richard Adams and British tycoons Robert Sangster and Roy Matthews.

"I prefer to think of the Isle of Man as an area of low taxation, rather than a tax haven," said House of Keys Finance Chairman T. E. Kermeen. And it is true that the island exercises much stricter control over its booming financial sector than more notorious tax havens like the Bahamas or the Channel Islands south of Britain.

Nevertheless, its economy is now doing so well that it can easily afford to maintain a generous miniature version of Britain's welfare state, with money to spare. Its only real problem seems to be the fact that it is attracting too many new residents.

Native Manxmen may already be outnumbered by the "come-over," as the immigrants are called. Some natives have formed a Manx Nationalist Party to protect their unique culture and the island's environment. Ironically, the nationalists' crusade to revive the Manx language is being aided by many of the newcomers, who are charmed by the island's Celtic past. Most schools offer Manx language classes and adult lessons are oversubscribed. The first English-Manx dictionary will be published later this year.

"We can never restore Manx as the language of the island but we can still preserve it," said Manx Radio sales manager Doug Fargher, who compiled the 800-page dictionary. "We've already lost a lot of our Manx culture."

The Manx islanders new interest in their past is part of a growing revival of Celtic heritage from Wales and Cornwall in south-western Britain to northern Scotland, Ireland and north-western France. A Celtic congress of representatives from these regions holds regular meetings devoted in part ot reviving the Gaelic languages.

The Isle of Man's more than 56,000 residents also are celebrating their Norse heritage this week. Last night, a crowd of 15,000 in the picturesque harbor of Peel watched a replica of the Viking longship Gokstad dock just beneath Peel's red sandstone castle. It had sailed 1,500 miles from Norway through the western islands of Scotland, the route taken by the first Norse invaders of Man.

House of Keys Speaker Charles Kerruish is one of those who believes that the new residents "have brought us a new interest in the island's unique dual cultural heritage. They have refused to let it die. And they are people with some resources."

The retirees from white colonial service outposts in the Empire, many of whom are people of means, have passed up Man's slightly seedy seaside towns, which are crowded each summer with tourists from nearby industrial Britain and Northern Ireland, to settle in fancy new homes in the relatively unspoiled interior of the 33-mile-long island. They are locally known as "When-I's" for their clannish nostalgia about the days "when I was in . . ."

Except for the island's aggressive tourism industry - including the heavily promoted millennium celebration and an annual series of world-recognized motorcycle races on its attractive valley roads - Man resembles a tiny England of a few generations ago, with its Victorian architecture, pastoral countryside, unhurried life-style, and still somewhat insular atmosphere.

The island's reigning philosopher-king, handsome, white-haired House of Keys political leader Clifford Irving, likes to say the "The Isle of Man is content and prosperous because we are allowed to paddle our own canoe in the middle of the Irish Sea. To continue to succeed, the island has to continue to be different." CAPTION: Map, no caption, By Richard Furno - The Washington Post; Picture 1, Rushen Castle, a fortress in Castleton, is part of the Isle of Man's heritage. The British Travel Association; Picture 2, A thatched cottage at Cregneish and a Manxman with his tools reflect the island's old-world charm. British Travel Service