Covent Garden, London's oldest formal square and the city's earthy, boisterous produce market for three centuries, began a fashionable new life today.

Its historic central market halls, magnificent curios of Regency and Victorian architecture lined with arches and columns and surmounted by soaring iron-ribbed glass roofs, have been expensively restored as a new trendy shopping center.

"The Market," as it was christened at its opening today, is expected both to become a popular new tourist attraction and the vital heart of an ambitious, controversial rehabilitation of one of central London's most colorful old neighborhoods.

Where shouting cockney porters carried crates of oranges and lemons piled in tall stacks on their heads and pushed heavy wheelbarrows laden with cabbages, carrots and strewn with litter, sedate shoppers now stroll in an atmosphere of nostalgic elegance under the vaulted glass roofs.

Where wholesale fruit and vegetable merchants operated from the storefronts lining the long market halls, top-of-the-market speciality shops now sell expensive handmade jewelry, French kitchen ware, boutique fashions, British crafts, antique dollhouses, rare books and newspapers, fancy spices and health foods. There are also haute cuisine restaurants on the market hall terraces and a pub extending down into old cellars.

Where Eliza Doolittle and Henry Higgins met amid the clutter of flower stalls in front of the columned portico of the cassical Inigo Jones church facing the market, the Italianate square Jones laid out 350 years is once again a cobblestone pedestrian piazza surrounding the gleaming market. The old neighborhood around the square which resembled a ghost town after the overflowing produce market was moved to a more spacious site south of the Thames River six years ago, is now vibrant with activity again.

Renovation and rebuilding sponsored gy the Greater London Council has been accompanied by a grass roots revitalization of the 94-acre labyrinth of narrow streets and lanes bordered by Leicester Square and Soho on the west, Bloomsbury to the north, the Inns of Court to the east and the Strand and Thames River on the south. While it has lost the congestion and clamor of the market made legend by George Bernard Shaw and Lerner and Loewe in "Pygmalion" and "My Fair Lady," it has regained its reputation as a haven for the arts, night life, good food and drink, and Bohemian eccentricity.

Its dominant cultural institution, the Royal Opera House at Covent Garden, just around the corner from the restored market hall, is building a big extension of its own. Four major dance studios have opened in old fruit and vegetable warehouses. Other abandoned buildings have been turned into new museums, restaurants, pubs, discotheques, boutiques, artisan's workshops and offices for architects, graphic designers and advertising agencies.

Another opera house, 15 theaters, countless pubs and restaurants, small publishing houses, specialty book shops, theater and dance rehearsal halls, stage equipment and costume suppliers, and musical instrument shops have survived at their old locations. Rules Restaurant in Maiden Lane has been a favorite of Dickens and Thackeray, Sir John Betjeman and Graham Greene, Actors and writers have made the Garrick Club London's liveliest gentleman's club since 1831. The tiny Lamb and Flag pub on Rose Street, built in 1623, is still the haunt of actors and dancers.

But the survival of all this has been in jeopardy ever since the produce market was moved away and renewal began. The forces of modernization and commercialization have been locked in continuing conflict with the area's artists, craftsmen and surviving Bohemian residents over what its future should be.

For every major building successfully renovated, there seems to be a hold in the ground for an intruding new structure. For every home or shop saved for a local resident or craftsman, another is being kept empty by a specualator waiting for the higher rents or redevelopment profits he expects as the area becomes increasingly trendy.

The surprisingly calm man in the eye of this storm is Geoffrey Holland, an architect who runs the Greater London Council team supervising the rehabilitation of the Covent Garden area. He pointed out the real disaster was narrowly averted when residents and merchants torpedoed the first government master plan for renewal, which would have produced a "brave new world" of wide streets, office towers hotels and a convention center. It would have been indistinguishable from the cold glass-and-concrete precincts that were built in and around the city's financial center to replace the rubble left by the blitz during World War II. Similar massive new developments also have been proposed for derelict warehouses districts along the south bank of the Thames.

The charge against the original renewal plan was led by the Covent Garden Citizens Association, which forced the Greater London Council to set up Britain's first and only citizen participation planning process, similar to what was done in many American cities in reaction to urban renewal projects like the new Southwest in Washington.

Geoffrey Holland's planners and Covent Garden citizen leaders came up with a new plan to save and restore the central market hall and 300 other buildings of significant or architectural value. The goal became to preserve as much of the old character of the neighborhood as possible, while giving it new commercial life and doubleling its residential population, which had dwindled to less than 3,000.

"We didn't foist a preconceived idea on people," said Holland. "It was a plan that stemmed from the people living in the area.We acted as the professionals to tell them what was feasible economically, architecturally and legally."

But some community activists still fear that what appears to be most feasible economically -- careful physical restoration financed by increasingly upmarket commercial ventures, including "The Market" itself -- may well save the area's best building but force out many of its present residents and merchants as rents and land value soar.

"We're criticized for allowing too much gentrification," admitted Holland, "just as in some restored inner city neighborhoods in the U.S. But there has been no real alternative. It requires vast sums to renovate, and it has been especially hard to do so in the current economic crunch.

"So we have to bring in the social improvements on the back of commercial. We are providing new housing, local convenience shops, clinics and sports centers. I think it's working, and I don't think any other strategy would have worked."

Holland's one blind spot in his admitted obsession with restoring Covent Garden Square, the focal point of the area, as nearly as possible to the formal piazza Inigo Jones designed in the 1630s for the fourth Earl of Bedford, whose family owned most of the Covent Garden area from 1541 until 1914. It was convent garden, from which it got its present name, when the church's land was confiscated and divided among favored nobles after the Reformation.

The piazza designed by Jones for the earl, with its temple-like church and arcaded residences for the wealthy, was the first of many formal London Squares built as the fashionable residential area of the city spread westward. A small market set up in a corner of the square by transient traders for Covent Garden's first residents grew so rapidly that it acquired a royal charter in 1670. Market buildings came later, and were replaced many times. The oldest part of the restored market halls dates back to 1830.