"After truly considering the opinions of parliament and heads of factions in it, I decide to declare withdrawal as president of the Republic of Indonesia," a humbled Suharto said on nationwide television just two days after unveiling a compromise plan which would have allowed a phased transfer of power.

The 76-year old leader announced that Vice President B.J. Habibie would complete the balance of the five-year term to which Suharto was elected in March.

Indonesia's only other change of presidents, Suharto's takeover from then-President Sukarno, was phased in over a period of years.

Habibie immediately took the oath of office, as Suharto and the top military leadership stood by. Armed Forces Commander Gen. Wiranto then vowed his support for the new president and made clear there would be no reprisals against the former strongman.

"ABRI will uphold the cultural values of this nation. ABRI will protectthe safety and the respectability of former Presidents including President Suharto and his family," Wiranto told the nation, using the Indonesian term for the armed forces.

A late-night revolt by Suharto's most powerful cabinet ministers was thefinal act that forced the 76-year year old leader to face the inevitable and step down. With hundreds of thousands of Indonesians rallying to demand his immediate resignation, the military lining the streets of his capital and even long-time loyalists abandoning him, Suharto faced little choice but to step down.

The key question now was how the opposition movement would react to a Habibie presidency. Their key demand has been the resignation of the president, but the 61-year old former vice president is seen as Suharto protégé who represents the authoritarian system that has been built up over more than 30 years.

Suharto said that while the cabinet was not being disbanded, ministerial powers were temporarily suspended. It was not clear whether Habibie would move forward with a Reform Council designed to reform the nation's political system.

The hand-over of power appeared certain to defuse the immediate threat of new violence in a nation wracked by unrest since the shooting deaths of several students early last week unleashed a wave of uncontrolled rioting by the poor and the umemployed that claimed more than 500 lives and gutted huge sections of the capital.

The president's decision followed a day of behind-the scenes maneuvering by the nation's political elite to find a way to convince the aging leader to step down before the nation was plunged anew into violence.

The parliamentary delegation of Suharto's own party, Golkar, Wednesday voted for a quick convening of the expanded parliamentary body that elects the president, the 1,000 member People's Assembly (MPR), so that Suharto could hand back the mandate he has held for more than 30 years.

"As long as Suharto is in power, reforms will not be possible," said Amien Rais, a key opposition figure, after addressing the crowds of students occupying parliament. Earlier, Rais withdrew his call for a million person march on Jakarta for fear of a "Tienanmen Square-style massacre".

But beneath the rhetoric and the "Peaceful Reform" banners hanging in villages across the country, there was a growing consensus that the prospect of a quick hand-over was giving way to a slower process which would, at very least, involve a plenary session of the People's Assembly.

But the soldiers appeared to go out of their way to avoid confrontations, allowing busloads of students to enter parliament, even as they kept everyone else out.

"The army is no longer supporting Suharto, it is supporting the institution," said one Western diplomat. "They want this done constitutionally. They don't want to set the precedent of an Indonesian president being driven out by the mobs."

Time was working against the president. He was faced with a situation where he had to quickly demonstrate progress toward genuine reform, or the vast majority of Indonesians would conclude his mea culpa was a smokescreen to retain power.

"What I wonder is whether the country can survive long enough to change all these laws," said a member of the outgoing cabinet. "The economy is dead. Foreign investors have fled. Can we afford to wait six, or even eighteen months, to get things moving again?"

"There should be a change of the national leadership now and the formation of a national government that is trusted by the people," said political analyst Arbi Sanit.

Demands from former Suharto loyalists for quick transition appeared to have as much to do with jockeying for power in a post-Suharto era as concern for the nation's stability.

Members of Suharto's party in parliament have the most to lose by electoral reform. By urging the president to hand over power to the People's Assembly before electoral reform is launched, they protect their role in selecting the nation's next leader.