The event was hailed as a landmark in the struggle of cloistered Saudi women for a public voice and face in the kingdom's strictly segregated society: Lubna Olayan, chief executive officer of a well-known Saudi company, delivering the keynote address in January at an international economic forum here.

But the kingdom's religious leaders were outraged, particularly after a picture appeared in Saudi newspapers the next day showing Olayan without a veil.

"Such a practice is agreed upon unanimously to be forbidden, as is newspapers' publication of photographs of such women in this unseemly, Islamically unlawful state," intoned the grand mufti, Sheik Abdalaziz bin Abdullah Sheik.

The incident highlighted the battle going on inside Saudi Arabia today, where modernists such as Olayan are increasingly challenging the country's ultraconservative Wahhabi Muslim establishment.

Arguably Islam's most puritanical sect, Wahhabism preaches strict adherence to the Koran's teachings and to an ascetic life. Its 18th-century founder, Mohammed ibn Abd Wahhab, sought to purge Islam of outside influences and restore its original purity -- a creed taken to xenophobic extremes by such modern-day followers as Osama bin Laden and leaders of Afghanistan's Taliban movement.

The single most important pillar supporting the ruling Saud family, the Wahhabis, are under siege at a time when the Sauds need them more than ever to bolster their rule against Islamic radicals.

Militant clerics and followers of bin Laden are lambasting the Wahhabi establishment for subservience to what they regard as a corrupt royal family serving secular American interests. Liberal reformers are demanding a major voice in government and significant changes. Women are pressing to break out of the Wahhabi social straitjacket.

Abroad, long-standing concerns over whether the House of Saud can survive are now particularly acute. The kingdom sits on one-quarter of the world's oil reserves and remains a vital source of oil for the United States at a time of rising demand. A recent CIA paper on Middle East developments between now and 2020 warned that it "should not be surprising" to see "a new radical regime" come to power in Saudi Arabia.

Since the 2001 terrorist attacks on New York and Washington, in which 15 of the 19 hijackers were Saudis, the Bush administration has been pressing the royal family to crack down on the largely autonomous Wahhabi establishment, its web of overseas charities and its extremist preaching.

Jolted more recently by multiple bombings and shootouts with terrorists in the capital, Saudi rulers have responded with a two-pronged strategy. First, they have completed a purge of militant preachers -- 2,000 to 3,000, out of 50,000 nationwide -- who might challenge their authority or inspire a popular revolt. Second, they have mobilized Wahhabi officialdom, from its highest scholars to the lowliest neighborhood imam, to stress moderation and condemn extremism.

The government has also begun pressuring the hard-liners by launching a national dialogue to promote consensus on some reforms they oppose. The dialogue has consisted of a series of public forums involving as many as 60 representatives from the kingdom's non-Wahhabi sects, Western-educated elites and women, but no senior Wahhabi clergy.

At stake in this high-risk reform strategy is whether the House of Wahhab will continue to have the credibility and moral authority to underpin the House of Saud.

"There is definitely a battle for the heart and soul of this country right now," said Hussein Shobokshi, a liberal-minded Jiddah businessman and newspaper columnist.

When King Abdul Aziz ibn Saud founded the present Saudi monarchy in 1932 and based its laws on the Koran, he struck a bargain with the leaders of his army of Wahhabi religious warriors: Affairs of state would be left to the Sauds and affairs of religion to Wahhab's descendants, the Sheik family.

"The al-Sheik family is extremely powerful," said Robert Jordan, a former U.S. ambassador to the kingdom. "It is like a parallel shadow to the royal family."

The Wahhabi hand stretches deep into the councils of the Saudi royal court and policymaking processes. The grand mufti is a Sheik, as are the ministers of Islamic affairs and justice. Through the Islamic Affairs Ministry, the Wahhabis control a network of 50,000 neighborhood mosques. Through the Justice Ministry, they control every court in the kingdom.

Overseen by the grand mufti, the Council of Senior Islamic Scholars issues authoritative religious edicts, or fatwas, and opinions on most issues of the day. The Committee for the Propagation of Virtue and Prevention of Vice enforces the edicts with its 5,000 fierce-looking, bearded mutaween, who patrol all public places.

The family's clerical allies also head the appointed, 120-member consultative Shura Council, most of the country's charities, the newly formed human rights commission and, until recently, the body in charge of women's education.

"We are concerned first for the stability and power of the state," Islamic Affairs Minister Saleh Sheik said in an interview. "If the Saudi state is strong, then Islam itself will be strong within the kingdom.

"Our family is supporting the kingdom and the royal crown," whom it "assists" but does not "lead," he said. Every Tuesday, the Sheiks and their Wahhabi religious allies meet with Crown Prince Abdullah, the kingdom's de facto ruler.

Since the early 1960s, the House of Saud and the House of Wahhab have feuded over the extent and pace of change -- from the introduction of traffic lights, radio and television to education for women, Western-style banking and the World Trade Organization.

Abdullah Alotaibi, a political science professor at King Saud University in Riyadh, said the Wahhabis feared that reform would cause them to "lose some of the advantages they have had for years and also their legitimizing role in Saudi Arabia."

Askar Enazy, a dissident liberal academic, said the Sauds would also lose power.

"Genuine reform will lead to a constitutional monarchy," he said. "Even cosmetic reform could lead to that. Once you start general reform, you undermine the base of Wahhabism and the legitimacy of the regime."

The word "reform" itself is distasteful to the Wahhabi establishment. "We prefer the word 'development' to achieve a better situation," said Sheik.

The Sauds and Sheiks traditionally have joined forces to face down challenges to their joint authority -- whether from Wahhabi extremists, liberal reformers or Iranian revolutionaries. The most serious threat came in 1979, the year Ayatollah Ruhollah Khomeini overthrew the shah of Iran. In Mecca, several hundred Wahhabi fanatics seized control of the Grand Mosque and held off Saudi security forces for several weeks.

Throughout the past decade, dissident Wahhabi clerics have risen up repeatedly to challenge both royal and religious officialdom. Today, bin Laden and his followers have brought their campaign to overthrow the House of Saud to the streets of the capital. A secret poll of 15,000 Saudis conducted for the government last year found 49 percent looked favorably upon bin Laden's fiery speeches. The same poll found less than 12 percent favorable to "liberal-oriented reformers."

In the past year, the Saudi rulers have turned to the Wahhabi scholars, or ulema, for help crushing Islamic extremists and containing liberal reformers.

"Seeking to overthrow existing legitimate regimes is forbidden," the grand mufti said in a late January sermon as 2 million Muslims gathered for the annual pilgrimage to Mecca. "Praise the leaders of the kingdom of Saudi Arabia who are providing us with peace and security."

Terrorism must be "crushed," he continued. "God says the penalty of those that fight God and his prophet and spread violence and terror is to be killed, crucified or have their hands and legs chopped off."

The government has mobilized Wahhabi clerics in its attempt to persuade hundreds of suspected extremists it has arrested -- including three well-known preachers -- to recant their views.

But many Saudis contend the House of Wahhab's iron grip is slipping. Shobokshi, the Jiddah businessman and columnist, ascribes this to expanded access to more moderate Islamic preachers elsewhere in the Arab world. "Saudis have discovered there are other ways to get interpretations of the Koran from other sheiks on the Internet and satellite television previously not available," he said.

Mohsen Awajy, an Islamic judge jailed for four years for his opposition activities, compares the House of Wahhab to a dying order. "The vast majority of Saudis are not interested in an experiment that is three centuries old," he said. "There is no doubt at all it would collapse without House of Saud support."

Today, the main battlegrounds are the education system and the status of women. In both fields, clerics are furious at what they see as assaults on Wahhabism.

In early January, 160 Islamic scholars, judges and professors issued a statement protesting changes in education, blaming liberals whom they described as "partisans of infidelity, polytheism and delusion."

Despite the protest, Education Minister Mohammed Ahmed Rasheed made clear in an interview that reform remained the order of the day. Over ulema objections, for example, he has ended religious lessons for primary school students that portray Christians and Jews as infidels to be shunned.

"We are putting much emphasis in Islamic teaching to encourage children to make a dialogue, listen to each other and be wassatiya -- neither to the extreme right nor the extreme left," he said. "A few of our teachers used to try to indoctrinate our young students."

Women now outnumber men among university graduates. The government poll of Saudi views conducted last year found that nearly 64 percent favored women being allowed to drive and 92 percent backed the "empowerment of women."

Nonetheless, last September, 130 clerics and academics came out against equal rights for women, which they said amounted to copying "infidel" Western women. It was the fault, they said, of "a vicious campaign from [the Muslim community's] enemy led by the American government to divert it from its faith."

Equality between men and women is not possible under Islam, they said. Allowing women to drive would lead to "many evils."

Wahhabi extremists accused the U.S. consul general in Jiddah, Gina Abercrombie-Winstanley, of encouraging Saudi women to unveil at the Jeddah economic forum in January, a charge she denied.

The veil is only one issue. The hottest topic is job opportunities, according to Olayan, a rare example of a Saudi woman who has risen to the rank of company CEO. She remains optimistic. "The government wants change, " she said in a telephone interview. "The time is right."