Bypassing Senate confirmation, President Clinton moved yesterday to directly install gay San Francisco businessman James C. Hormel as ambassador to Luxembourg.

The president invoked a provision of the Constitution allowing him to make such appointments during a congressional recess. Hormel, who will become the first openly gay U.S. ambassador, can serve in the post through the end of 2000.

The "recess appointment" drew criticism from a spokesman for Senate Majority Leader Trent Lott (R-Miss.) and conservative groups but was praised by gay rights activists.

Hormel, 66, an heir to the Hormel food fortune and a former dean at the University of Chicago Law School, was nominated in October 1997.

Religious conservatives, who criticize Hormel's advocacy of gay rights, have opposed the nomination. Lott refused to let the Senate vote on the nomination even though the Senate Foreign Relations Committee approved it.

"The denial of a confirmation vote by the Senate leadership, a vote he would have easily won, was nothing more than anti-gay discrimination," said Elizabeth Birch of the Human Rights Campaign, the nation's largest gay and lesbian political group.

Lott spokesman John Czwartacki criticized the appointment as "a slap in the face," particularly to Catholics.

Czwartacki cited what he said were Hormel's links with the Sisters of Perpetual Indulgence -- drag queens who dress as nuns.

White House spokesman Barry Toiv said Hormel does not support "any such group. The idea . . . is outrageous and is false."

Hormel's appointment to the small European country was possible because Congress is in recess, not returning from its 10-day Memorial Day break until Monday.

The Family Research Council, a conservative group, said Clinton had given Hormel "a government-sanctioned platform" to "advance the gay agenda."

But Sen. Dianne Feinstein (D-Calif.) said, "The president did, I think, the honorable thing to break this logjam. . . . [Hormel] will serve with distinction and he will serve very well."

CAPTION: James C. Hormel will become the first openly gay U.S. ambassador.