VIENNA, JAN. 1 -- President Kurt Waldheim, embroiled in controversy over his war record, denounced his nation's Nazi past today and admonished fellow Austrians to avoid racial hatred and intolerance.

In a New Year's Day address, Waldheim said efforts to stimulate the economy and secure social achievements require "a new form of solidarity of people toward each other and of citizens of our country toward our homeland."

He added, "If we want to achieve this, we must avoid sowing discord, envy and hatred."

The president ignored the continuing controversy surrounding his wartime past, which is being investigated by a panel of foreign historians.

The annual New Year's speech on national television noted important anniversaries in 1988, which marks 50 years since the Anschluss, Austria's annexation by Nazi Germany, and 70 years since the Austro-Hungarian Empire collapsed and Austria became a republic that Waldheim said was "born in pain."

The republic died on March 12, 1938, when German troops marched into Austria. A day later, Nazi dictator Adolf Hitler declared his homeland's merger with the German Reich.

"Without 1918, 1938 cannot be understood," Waldheim said, adding that it is "important and correct" to learn from past mistakes.

"One must say openly time and again that in 1938 the criminal policy of the National Socialist {Nazi} regime led us into an abyss, a policy many discerned when it was already too late," he added.

Since his election in June last year, Waldheim publicly has denounced the Holocaust and the Nazi persecution of Jews. But he made a relatively vague reference to those years in the New Year's address.

"Tens of thousands of our fellow citizens, whose families had helped shape Austria's politics, culture and economy for generations, became in those tragic years victims of racial hatred," Waldheim said.

"Let us beware of such a frame of mind, let us beware of hostility to foreigners and intolerance," he said. "Let us give the members of our minorities the certainty that they can feel as equal fellow citizens and have a sheltered home in Austria."

Most of the 65,000 or so Austrians who lost their lives under Nazi rule were Jews deported to concentration camps where they perished.

Waldheim told Austrians that "we must furnish proof that we understand how to avail ourselves correctly of the commemorative year 1988: as a source of power for a new self-confidence, for strengthening democracy as well as the faith in our future and our common fatherland."

The controversy over Waldheim centers on allegations that he was involved in war crimes while serving as a lieutenant in a German Army military intelligence unit in the Balkans from 1942 to 1945, and that he attempted to hide his wartime role. Waldheim has consistently denied any wrongdoing.

But 18 months after his election, the controversy surrounding Waldheim has not died down. In a Christmas Eve newspaper interview, Socialist Interior Minister Karl Blecha said Waldheim should resign even if he is cleared by a commission of military historians now investigating his war record.

After Waldheim reportedly telephoned Chancellor Franz Vranitzky to complain about the interview, Blecha publicly softened his statement, saying he had described a course of action he would take if he were president.

{On Thursday, the conservative daily Salzburger Nachrichten said it wished Waldheim would take the manly step of resigning in his New Year's Day speech, Reuter reported.}