Every workday morning, while the sky is still flat gray with the fog that dulls Lima this time of year, Enrique and Berta Gutierrez wait for the bus that will take them away from the crumbling dun-colored neighborhood that Peruvians, without a hint of bitterness, call La Victoria -- victory. The bus rattles along so loaded that one young man must literally hang out the front door, sweeping up new passengers and waving menacingly at nearby cars. It drops the Gutierrezes off downtown, near the locked blue box they depend on for their livelihood.

Under the hinged lid of the big wooden box, which Enrique rolls slowly out of the parking lot where he leaves it overnight, lie thick soft piles of wool sweaters, alpaca blankets, shaggy rugs with llama and Inca designs. The Gutierrezes are ambulantes, street vendors, and by 10 a.m. the pink plastic cloth on which they spread their wares has almost disappeared under the horde of vendors who have turned much of downtown Lima into one great exhaust-filled flea market.

Here on open sidewalks, between the tourist hotels and the Spanish colonial government buildings, thousands of men and women sing out the virtues of their costume jewelry, their bottled perfumes, their kitchen knives, coconut slices, panpipes, Flintstones sweatshirts, Pittsburgh Steelers sweaters, shoe polish, fried bread, cat's-eye marbles, electrical outlets, used magazines, milk-glass ceiling lamps and two-tiered silver-plated candy dishes.

There are playpens filled with packaged men's shirts. There are whole dress racks bulging with pastel polyesters. There are long wooden tables full of dark dried herbs, with explanations of what they do: "Cures nerves to the heart," or "Cures women's illnesses."

There are striped awnings and blaring battery-operated record players and improvised twine clotheslines hung across the sidewalk to give proper display to a dozen pairs of multi-colored gym shorts. One stretch of blocks is so crowded with shouting vendors that automobile drivers have to lean on their horns and inch past the shoppers wandering down the middle of the street.

"There are days we sell and days we don't sell," Berta Gutierrez said one warm afternoon last week. She is a very small, dark-skinned woman, wide-hipped and quick in her movements, with straight black hair pulled back into a ponytail. On a reasonably good day, she said, they clear $5 or $6. They have six children.

"We have no jobs," she said. "If the government would give us jobs, we wouldn't be selling in the street. Vendors have eight, nine, seven children, and we have no other way to support them."

In the past 10 years the vendors, their numbers estimated at anywhere between 20,000 and 200,000, have become Lima's most memorable fixture. No other South American capital so graphically displays its unemployment and underemployment -- a combined total that most economists estimate as at least 50 percent in Peru.

"It's a disgrace for Peruvians," said Alberto Guevara, whose small bookstore is sometimes accesible only through racks of stockings and women's slips. "I don't think there's a city in the world so dirty, with its main streets so cluttered. What Peruvian would want a capital like this?"

In April, after years of complaints from public officials and store owners like Guevara, a mayor's committee announced that all the downtown street vendors -- about 4,000 of them, according to the committee's census -- were to be taken off the streets and relocated in two special city-owned clearings. There, the committee declared, the vendors would line up in respectable rows, pay a little something to the city for rental on their booths, and operate like a traditional flea market.

The vendors are furious.They have marched on the mayor's office to insist that they will not leave their downtown sidewalks and the relocation, which is supposed to begin June 15, is likely to be considerably more heated than the mayor's committee had wished.

"You can't sell there," said Joel Cano Vasquez, a sidewalk shirt-seller with a stubble of beard and a thick shock of black hair hanging down his forehead. "It's very isolated and the place is full of thieves. And it is an area our customers don't know. The population is growing and the work is diminishing, so we've got to work. They're never going to get rid of vendors. It's a way to survive. What does this government want, that we should steal?"

Cano, like the young man hawking open-toed rubber sandals beside him, said he turned to street selling when he was laid off five years ago from his factory job. There are a lot of explanations as to why the number of street vendors has grown so dramatically over the last 10 years, but many people appear to agree with Cano: Peru's previous military government got itself into terrible straits during its 12-year rule. And although it is technically illegal to sell things like shirts and plastic hair rollers on the streets, nobody was much inclined to enforce the law when the unemployed urban and rural poor began gathering on the Lima sidewalks to try earning some semblance of a living.

It did not take long for the relocation of the street vendors to turn into a political issue, with some opposition voices on the left taking up their cause. City officials have so far remained unmoved. A mayoral aide at last week's march said the June 15 relocation date was firm, "Even if we have to do it by force."

"These people are at the base of a huge pyramid of exploitation," said Carlos Michelsen Terry, an urban transportation company president who belongs to the mayor's advisory committee on street vendors."It's really a racket . . . The reason there's not more [downtown] is the existence of a very well-organized mafia that has its own protection racket and charges between $3 and $12 per day."

Street vendors in a few random conversations would not acknowledge any such protection racket, but Michelsen said the mayor's committee learned about it when they were counting the number of downtown vendors. They also learned in detail, he said, about the vast underground economy that supports the vendors -- smugglers who sell vendors their contraband cigarettes, unlicensed factories that pay no business taxes and sell the vendors merchandise of dubious quality.

For a shop owner like Guevara, who figures he pays about $2,500 a month in rent and taxes -- neither of which are ever paid by a street vendor -- the sight of the swelling sidewalk bazaar is enough to make his heart sink every time he looks out the front door.

"We have lost sales -- any businessman will tell you this -- of 50 percent, more or less, which is a great deal for a small businessman," Guevara said as he sat, trim and gray-vested, among the dusty cartons and shelves of his store's little office. "First, it's the competition. Also, the numbers of vendors stop our established clientele from coming down here. Our people are mostly middle-class -- they're the ones who read -- and they don't want to come any more. There are so many vendors, and so many crowds, that thieves have begun coming around. Even tourists are starting to detour around the side streets."

What if Cano the shirt-seller is right and the vendors cannot survive without their downtown street traffic? "I think they will change their product mix, because you can't sell the same stuff there that you sell on La Union," Michelsen said, referring to the crowded street where Guevara's bookstore stands. "I trust so much in the entrepreneurial qualities of these people that they will be able to adjust rapidly."

And if they cannot adjust?

Michelsen looked at the ceiling for a moment and then smiled. "Well think of something," he said.