MOSCOW, MAY 1 -- Waving their fists and jeering the Kremlin leadership, tens of thousands of Muscovites today transformed the traditional May Day celebration of "socialist labor" on Red Square into a caustic rebuke of Communist power.

Soviet President Mikhail Gorbachev seemed transfixed at times as the parade, once a tightly controlled ritual of hollow hurrahs, suddenly became a boisterous demonstration of popular anger and protest. Some demonstrators carried Lithuanian and Czarist-era Russian flags, and a few even displayed Soviet flags with the hammer and sickle torn out.

As Gorbachev and the rest of the leadership watched from a reviewing stand atop the Lenin Mausoleum, the demonstrators hoisted placards expressing disdain for Kremlin policy and ideology.

"The Blockade of Lithuania Is the President's Shame!" "Socialism? No Thanks!" "Communists: Have No Illusions. You Are Bankrupt." "Marxism-Leninism Is on the Rubbish Heap of History." "Down With the Politburo! Resign!"

It was a stunning drama played out on the cobblestones of Red Square -- the Soviet Union's most resonant political stage. As Kremlin loudspeakers boomed out government slogans and marching music, the demonstrators shouted their discontent for the first time to Gorbachev's face. A bearded Russian Orthodox priest in the parade carried a seven-foot-high crucifix and shouted, "Mikhail Sergeyevich, Christ Has Risen!"

For the first time, the Kremlin made participation in the May Day demonstration open and voluntary this year, allowing unofficial groups and parties to join the parade. Moscow's new mayor, radical economist Gavril Popov, stood alongside the Kremlin leaders on the mausoleum.

The transition from orchestrated enthusiasm to genuine political feeling provided the most startling public evidence yet that Gorbachev's popularity, especially among urban intellectuals and young people, has plunged and that the Communist Party is rapidly losing ground to disparate movements and competing political parties.

"Ceausescus of the Politburo: Out of Your Armchairs and Onto the Prison Floors!" the placards read. "Gorbachev Is the Chief Patron of the Mafia!" "Let the Communist Party Live at Chernobyl!" "Down With Empire and Red Fascism!" "Down With the Cult of Lenin!"

In earlier times, the May Day crowds were compelled to carry giant portraits of the Communist Politburo leaders. Today, the two portraits most in evidence were those of the late human-rights campaigner Andrei Sakharov and maverick politician Boris Yeltsin.

Gorbachev, the politician who set all these forces around him in motion, watched the spectacle for about 25 minutes and then headed down the mausoleum steps and into the Kremlin. The rest of the leadership, as well as guests from labor unions and the Moscow city council, quickly followed Gorbachev's lead. But the demonstration continued.

"We were all stunned. It's as if Gorbachev decided to turn his back on the voices of the people," said one marcher, Alexander Afanasyev, a leader of the new students' Social Democratic movement. "The leadership may try to dismiss what happened here today as just some extremists blowing off a little steam, but it runs deeper. Gorbachev has done a lot of good, but when it comes to us, the radicals, he turns away from his natural allies."

Soviet television gave extensive coverage to the first hour of the parade, which was dominated by trade unions and workers carrying far more conservative banners, including "Down With Private Property." But once the wave of radicals began, the broadcast was halted abruptly.

When the parade finally ended, two veterans of World War II in their seventies, their chests ablaze with rows of medals and ribbons, stopped at a vending machine near the Lenin Museum to buy glasses of mineral water. They were disgusted with the morning's spectacle, depressed at what modern times had brought.

"As far as I'm concerned, it was just organized slander, an insult to the Communist Party and everything we've ever stood for," said Nikolai Alexeyev. "It shows Gorbachev has no control."

"They just spit on us," said Vassily Estratov. "They spit on the party, the army."

In other Soviet cities, the atmosphere was at least as charged as in Moscow. In Lvov, the center of the Ukrainian independence movement, demonstrators carried icons of the Virgin Mary and signs saying, "USSR: The Prison House of Nations." They cheered former political prisoner Vyacheslav Chornovil, who is now the mayor of Lvov. Crowds in the Moldavian capital, Kishinev, carried Romanian, not Soviet, flags.

In Leningrad, where Soviet state founder Lenin began the Bolshevik Revolution in 1917, city authorities canceled the May Day parade, but independent political groups staged an unofficial rally.

There were unsanctioned May Day rallies in many Soviet cities last year, but what made this year's events so significant, in Moscow especially, was that marginal protests once barely tolerated had taken center stage. The demonstrators from Pushkin Square and Luzhniki Stadium had suddenly turned up at the Kremlin.

The political diversity of the protesting groups was extraordinary: Anarcho-Syndicalists, Constitutional Democrats, Social Democrats, Christian Democrats, Democratic Platform, Democratic Union and many others. Afterward, young activists distributed dozens of independent newspapers and magazines, some of them printed on hand-cranked mimeograph machines. Some featured lampoons and cartoons of Kremlin politicians.

Gorbachev may not have been pleased by the intensity of today's demonstrations, but it has long seemed certain that such forces would gain confidence and strength this year, especially after the party gave up its constitutionally guaranteed power.

The morning began rather calmly in Red Square as loudspeakers churned out treacly Soviet pop tunes and Pete Seeger's "We'll See That Day Come Round." Then, after Gorbachev and the rest of the leadership assembled on the mausoleum, the rally got under way with a series of speeches.

In each one, the speaker echoed the current hesitant line on economic reform: that radical measures were needed, but that social guarantees must somehow be protected as well. In private recently, Gorbachev has talked about the need for privatization of Soviet industries, but his advisers say that his lack of political support prevents such radical, quick changes.

Many signs carried by workers and members of official unions reflected the great fear among much of the populace that a transfer to a market economy will bring about spiraling inflation and unemployment. "Enough Experiments," said one banner, "Give Us Work." Another said, "A Market Economy Is Just Power to the Plutocracy!"

It seemed at first as if this May Day would not be much different from earlier ones in the Gorbachev era. The atmosphere was far less oppressive than in the Brezhnev period, but not quite in touch with the spirit of past unofficial demonstrations.

But suddenly, as marchers carrying the red, yellow and green Lithuanian flag came into view, it was obvious that a new era was about to begin in Red Square.

"I've been forced to go to these rallies for years, and this is the first time I've come voluntarily, acting from my own soul," said Vitali Mindlin, who carried a pro-Lithuanian banner. "Gorbachev may have been insulted by our openness, but we have to take that risk. One can no longer afford to act like someone's subjects. We are our own masters. The people dictate the moment now, not Gorbachev."