SYDNEY, AUSTRALIA, JAN. 26 -- The Sydney Symphony Orchestra struck up "Waltzing Matilda" and people in pubs all over town spilled into the streets today as the descendants of convicts stood side-by-side with British royalty to mark the 200th anniversary of Australia, once one of the world's most miserable penal colonies and now a modern nation.

Police officials estimated that as many as 2 million Australians flocked to Sydney Harbor for the day-long celebration, swilling millions of cans of beer, launching thousands of skyrockets and jamming the area with tall ships, small boats, helicopters and blimps.

Commentators called it "the party of the century" for a nation that learned how the hard way.

"From the worst possible beginnings, a great nation has been built," Gov. Barrie Unsworth of the state of New South Wales declared in a ceremony marking the arrival of the first prisoners from Britain in 1788.

And today's blowout was only the beginning; the party ushers in a year of celebration that is to include more than 30,000 events.

Britain's Prince Charles said: "As history goes, 200 years is barely a heartbeat. Yet look around you, and see what has happened in that time: A whole new free people."

But even as Charles spoke, more than 15,000 aborigines and thousands of white supporters were converging for a protest rally in a downtown park. They came from across the country, and their banners bore such messages as "200 years of White Lies," "Bicentennial Invasion" and "40,000 Years Is Not a Bicentennial."

In speeches and interviews, leaders of the aborigines, a people who have inhabited Australia for at least 40,000 years yet never had a single treaty with the British colonists, repeated demands that they be included in governmental decisions and be granted absolute land rights.

Officials said that today's peaceful rally was the largest gathering ever of aborigines, who now number about 300,000.

The Rev. Charles Harris, the aboriginal organizer of the protest, said it was an important landmark in his peoples' struggle for rights.

"I'm hoping this will be the first step in the reconciliation process between blacks and whites in this nation," he said.

Prime Minister Bob Hawke made no specific reference to the aborigines, although he said it was a day for all Australians to celebrate.

And they did.

"What a Party!" The Sun, an evening tabloid, headlined its main story on the event, and went on to say that "never has there been a day on which it felt so good to be Australian."

With temperatures reaching into the 80s, tens of thousands of celebrators poured out of pubs into the streets.

The sky above was crowded with helicopters, blimps, skywriters, even a Boeing 747, which a group said it had chartered to prove that they were "higher than a kite."

Virtually everywhere in the city, trash cans overflowed, parks filled with lovers -- some wearing little more than Australian flags -- and the air filled with Irish music, folk songs from the outback and rock 'n' roll.

With typically Australian candor and self-effacing pride, many commentators noted ironic similarities between the party and the weeks of madness when the first fleet arrived in Sydney Harbor Jan. 26, 1788, carrying more than 700 convicts. On Feb. 6, a ship brought in 200 women convicts. Wild parties reportedly went on for some time.

In all, 170,000 convicts were sent here between 1788 and 1860.

Descendants of those first convicts, along with those of tens of thousands of British pioneers and gold miners who followed, make up the core of Australia's overwhelmingly white population of 16 million.

True to their national personality and style, even top politicians are unabashed about their inauspicious roots. And revelers were overheard today defending great-great-grandfathers who picked pockets, slashed throats, robbed banks or blasphemed against a king 200 years ago and 15,000 miles away.