On a small, circular dance floor a willowy blond in a tight, black miniskirt sways seductively to the strains of Donna Summer's "Love to Love You Baby." A group of young businessmen sip their whiskey and look on lustfully.

It's a familiar scene at smoke-filled nightclubs across Istanbul's Bohemian Beyoglu neighborhood. But here at Vat 69, the exquisitely made up dancers are transvestite male prostitutes and tonight they appear unusually subdued.

"Those police tried to kill another one of us," said the blond, introducing himself as Nekras, a Bosnian Muslim who moved to Istanbul from Sarajevo three years ago "because transvestites do better business here."

"Sima is in hospital now," he said. "The poor kid is still in shock."

Unlike officially secular Turkey's conservative Anatolian hinterland, this cosmopolitan city of 12 million straddling Europe and Asia has long been a haven for transvestites, transsexuals and gays.

Turkey's fascination with transvestites dates back to Ottoman times when, during military campaigns, the sultan would take along a contingent of "pretty young boys," or celtikci, for his distraction. Transvestite performers frequently appear during prime time on national Turkish television. Turkey's best loved classical music singer is Bulent Ersoy, a transsexual.

But with the rise to power in recent years of Islamic-oriented politicians in local government, there has been a rising campaign of discrimination--and allegedly violence--aimed at non-heterosexuals.

Sima's story is not unusual. Like a growing number of transvestites who hustle customers on the E-5 highway linking Istanbul to the capital Ankara, Sima was chased by baton-wielding police into oncoming traffic, said his friends at Vat 69. Sima, 21, was hit by a car and suffered a fractured shoulder and a few broken ribs.

Others have not been as lucky. "We know of at least four transvestites who died this year after police ran them onto the road," said Demet Demir, a prominent campaigner for transvestite rights. "There is a systematic campaign to wipe us out."

Even so, victims and their families rarely press charges for fear of further police persecution.

Demir, 38, who underwent a sex change operation three years ago, said the troubles involving Istanbul's roughly 2,000-member transvestite and transsexual community began in 1994, when the country's leading Islamic-oriented political party came to power in the Beyoglu district.

Hundreds of transvestite prostitutes living in and around Beyoglu were forced to abandon the area as a result of a "purification" campaign, which gained force in 1996 with the arrival of Suleyman Ulusoy, a notorious police chief nicknamed "the Hose Man" because he allegedly beat his victims with a thick, rubber hose.

Methods employed by police, according to the Turkish Human Rights Association, include arbitrarily detaining and beating the transvestites, severing their phone lines and hacking down their apartment doors with axes during frequent raids.

Chased out of Beyoglu, many transvestites, like Sima, have begun soliciting along the E-5 highway. "The few that still live here are the rich ones who can afford to bribe the cops," said a salesman at the Punto Shoe Emporium, which caters to transvestites.

Demir said she fears that pressures will increase because of the influence of the Nationalist Action Party, an ultranationalist right-wing group that shares power in Turkey's coalition government formed in June by Prime Minister Bulent Ecevit and the Democratic Left Party.

A female lawmaker from the nationalist party was widely quoted in the Turkish press last month as blaming "those transvestites" for the earthquake that devastated northwestern Turkey on Aug. 17, killing more than 17,000 people. Within days, a group of transvestites began distributing food and clothing to victims in the quake zone, bought with funds raised in their community.

For all their problems, male transvestite prostitutes continue to attract many more customers and charge higher fees than their female counterparts, said Muhtar Cokar, a doctor who manages an Istanbul-based project aimed at eradicating sexually transmitted diseases. Many of the transvestites become prostitutes because they are unable to find work elsewhere.

CAPTION: Demet Demir, a Turkish activist for transvestite rights, says, "There is a systematic campaign to wipe us out."