Gorbachev Steps Down : ‘Nuclear Button’ to Yeltsin; Red Flag Lowered : Transition: The last Soviet president criticizes the commonwealth but voices faith in the public’s wisdom.

Mikhail S. Gorbachev, the last president of the Soviet Union, resigned Wednesday night, stoutly defending his ultimately failed attempts at transforming his homeland and voicing alarm at what the future holds for it.

“We are now living in a new world,” Gorbachev said in a brief farewell address. It was a world the 60-year-old career Communist had an enormous role in creating, but one that finally held no place for the revitalized Soviet socialism that was his longtime ideal and goal.

Earlier in the day, Gorbachev assured President Bush he would transmit the last remaining prerogative of his office--the Soviet “nuclear button”--to Russian Federation President Boris N. Yeltsin immediately upon his resignation. “And so, Mr. President, you can spend Christmas evening in peace,” Gorbachev promised Bush by telephone, the Interfax news agency reported.

At 7 p.m. Moscow time, a wan and glum-looking Gorbachev, appearing live on state-run television, announced that he was stepping down, ending almost seven years at the Kremlin’s helm and one of the most hopeful, and yet contradictory, reigns in the nation’s history.

Gorbachev’s resignation had been inevitable since last Saturday, when Yeltsin and the leaders of 10 other Soviet republics clinched an agreement on creating a loose “Commonwealth of Independent States” on the ruins of the rapidly disintegrating Soviet state.

Gorbachev steadfastly opposed the commonwealth, even in the final seconds of his presidency, saying on TV: “I firmly came out in favor of the independence of nations and sovereignty for the republics. At the same time, I support the preservation of the union state and the integrity of this country.

“Developments took a different course,” said Gorbachev, bobbing his head for emphasis. “The policy prevailed of dismembering this country and disuniting the state, which is something I cannot subscribe to.” Later, he noted: “I am concerned about the fact that the people in this country are ceasing to become citizens of a great power, and the consequences may be very difficult for all of us to deal with.”

But he expressed “hope and faith” in the ultimate wisdom and force of spirit of the more than 290 million Soviet people, who he rightfully noted were liberated from the “totalitarian system” under his reformist leadership.

After his speech, the red hammer-and-sickle flag that had flown over Gorbachev’s official Kremlin residence was struck and replaced with the white, blue and red tricolor of Yeltsin’s Russia, an unequivocal emblem of the new order.

Gorbachev signed a decree relinquishing the duties of commander-in-chief of the 3.7 million-strong Soviet armed forces, the world’s largest standing force, and transmitting the right to order the use of the Soviet nuclear arsenal to Yeltsin.

The Russian leader did not show up, as expected, at Gorbachev’s offices after the resignation, press reports said. Soviet Defense Minister Yevgeny I. Shaposhnikov took part in transferring the launch codes and hardware for implementing them.

“In whose hands is the button now?” a Russian correspondent asked Shaposhnikov later Wednesday evening.

“In dependable hands,” the marshal answered with a smile.

Addressing the Russian legislature in the morning, Yeltsin said that, although he will possess a “single button” commanding the 27,000 Soviet nuclear warheads, he will need the consent of leaders of the other republics where the arms are based--Ukraine, Belarus and Kazakhstan--to use it. A hot line telephone is being installed to this end, Yeltsin said. He told deputies that details cannot be disclosed because they are state secrets.

Banishing the last vestiges of the ideology that reigned supreme here for more than 73 years, the Russian legislature voted 137 to 14 to change the name of the republic to “Russian Federation,” deleting the labels Soviet and Socialist .”

With Gorbachev’s resignation, announced in an uncharacteristically terse 12-minute speech, “an entire epoch in the history of our country and the world comes to a close,” Tass diplomatic correspondent Viktor Runov commented.

Historian Yuri N. Afanasyev, one of the Gorbachev’s first allies to break publicly with communism, observed that, “Gorbachev’s fatal mistake was that he wanted to preserve what could not be preserved: the empire and socialism. That is the origin of all his mistakes--he posed as a repairman for something that was beyond repair.”

But even Gorbachev’s method of leaving office--an orderly, dignified departure--showed the deep mark he left on life here. The only other Soviet leader not to die in office, Nikita S. Khrushchev, was cashiered in disgrace in 1964 and immediately became an official non-person.

Yeltsin told CNN on Wednesday that he thought Gorbachev was living through the most difficult day of his life. One of Gorbachev’s spokesmen, Alexander A. Likhotal, said he believed his boss was filled with “anguish.” Gorbachev himself said Wednesday night that his wife, Raisa, and other members of his family were taking his resignation “bravely.”

But the man who led the Soviet Union since March 11, 1985, succeeding Konstantin U. Chernenko, made it perfectly clear he is not leaving the political arena.

“I am not going to run into the woods,” Gorbachev, speaking to CNN after his resignation, recalled telling Bush in their phone call. Although he opposes the idea of the commonwealth, he said he would unite with Yeltsin and leaders of the other republics to toil for its success.

“I will stay with them till the end--if they work to promote democratic changes and better life for the people,” Gorbachev said. If they don’t, he said pugnaciously, he feels free to “give his assessment.”

Job offers have poured in for Gorbachev from countless quarters, including American universities. But the ex-Soviet leader indicated that he wanted time to think. He also said he had not had a genuine vacation since 1985--”and each of those years could be counted as several.”

Reports in the Moscow-based press have said Gorbachev intends to head the Fund for Social and Political Research, a think tank known as the “Gorbachev Fund,” which he founded after the August putsch , and which employs about 200 people.

Under an agreement reached by the leaders in Alma-Ata, the Kazakh capital, Gorbachev will keep his sleek black presidential Zil limousine and a second car, plus a monthly pension equivalent to his 4,000-ruble-a-month presidential salary, sources said.

Yeltsin told a gathering of newspaper editors from Russia earlier this week that Gorbachev will move out of his presidential dacha and apartment to more modest quarters. “I am not going to move in there,” Yeltsin was quoted as saying. “Maybe we will give it to some scientist.”

According to Yeltsin, Gorbachev also asked for immunity from criminal prosecution as outgoing head of state, but the leaders of the commonwealth refused. “If you are worried about something, better confess now,” Yeltsin told Gorbachev, according to the account in Moscow’s Kuranty newspaper.

Gorbachev also apparently wanted a veritable army of bodyguards, but was allotted only 20.

With hindsight, it is obvious that Gorbachev’s presidency was mortally wounded one Sunday in mid-August, when top-ranking members of his entourage, including his hand-picked vice president, Gennady I. Yanayev, set in motion a conspiracy to overthrow him. The poignancy of Gorbachev, in Russian journalist Leonid Grozman’s words, is that “he was betrayed by friends, and rescued by opponents,” Yeltsin foremost among them.

In fact, at the peak of his power, it was Gorbachev in February, 1988, who suggested that Yeltsin think about retiring. The outspoken Siberian radical had just been booted out of top Communist Party posts for--among other offenses--daring to oppose a Gorbachev “cult of personality.”

Yeltsin told CNN that Gorbachev first spoke of vacating his Kremlin offices after the Dec. 8 decision by Russia, Belarus and Ukraine that formed the nucleus of the commonwealth. Wednesday was settled on for a formal announcement after last Saturday’s meeting in Alma-Ata of the leaders of 11 republics doomed Gorbachev’s plan for a single confederative state.

TEXT: A14; OTHER STORIES, PICTURES: A6-A15, F1