In a remarkable bid to rescue his ailing party from looming electoral oblivion, East Germany`s new Communist Party leader Sunday proposed reversing virtually every decision the party ever made during its 40-year grip on absolute power.

From scrapping the army`s goose steps and Nazi-like uniforms to ending the country`s obsessive pursuit of Olympic gold medals, Gregor Gysi, the 41-year-old reformist lawyer elevated from obscurity to the party leadership only a week ago, outlined nothing less than a complete restructuring of his once hard-line Stalinist party along new, democratic lines.

And he warned against the eventual reunification of East and West Germany, saying such an action could rekindle aggressive German nationalism and leave East Germany ''an underdeveloped province'' of West Germany.

''Those who talk of a `Greater Germany` are playing with fire,'' he said. Among many radical changes, Gysi told the more than 2,700 delegates to an emergency party congress they should: protect East German Jews from anti-Semitism and extend diplomatic recognition to Israel; cut off massive government economic subsidies and open markets to freer competition; disband party organizations in the work place and the army; pay restitution to citizens hurt by failed Communist policies, and remove the concept of political crimes from the country`s lawbooks.

Just for good measure, Gysi urged his comrades to allow private ownership of TV and radio stations, hire their own advertising agency to improve their image and invite rock bands to spread the new gospel of democracy.

Gysi, an unassuming lawyer well-regarded by pro-democracy leaders for having defended human rights activists, spoke for 1/2 hours in a gymnasium hall noticably absent of party banners or decorations. There was not even an East German flag.

He had something to say to every conceivable interest group in the country, offering women, for example, equality with men; farmers more say in what and how they plant; universities the freedom to choose professors based on competence and not party membership, and young men the prospect of a shortened term of mandatory military service.

Gysi vowed to root out the high level corruption revealed last month by the newly aggressive East German press. He said he would return to public uses many of the luxury homes, private schools and expensive cars that high-ranking party officials had kept for themselves. The East German Communist elite was said to favor Volvo automobiles because they could not bear to be seen in West German luxury cars.

The party delegates, who until just a few months ago were part of an organizaton that favored shooting fellow citizens who tried to escape the country, responded with cheers, applause and a unanimous endorsement of Gysi`s new thinking.

In so doing, they hoped to cast themselves as a party of reformers and catch up to the broad pro-democracy movement, which has been pressing for similar reforms for months and has now spawned several new political parties that intend to compete in the country`s first-ever free elections, scheduled for May 6.

It was pressure from the pro-democracy forces, and the frenzied summer exodus of hundreds of thousands of East Germans to the West, that forced the ruling Communist regime to crumble and then open East Germany`s walled border. But not even Gysi was so bold as to suggest his discredited party would regain control of the government any time soon. Several former party leaders, chief among them former party leader Erich Honecker, stand accused of wide-scale official corruption, and the country`s economy is in a shambles.

''We are not concerned with winning a majority,'' Gysi said in an interview after the party meeting ended. ''We only need enough votes to be able to decisively shape what happens. We are ready for coalitions, and are interested in them.''

Even those modest hopes, however, might be overly optimistic, if the opinion of 23-year-old Sylvia Markl, a waitress who served fat sausages to the Communist delegates, is at all representative.

''They are asking us to believe that today they are suddenly different from what they were yesterday,'' she said. ''The words are very nice, but I don`t know how they are going to win back people`s trust.''

Gysi said that the much-feared state security police, or Stasi, ought to be revamped and downsized and given orders to stop spying on political activists.