By Chris Buckley

LHASA, June 21 - Chinese-appointed Tibetan leaders used the passing of the Olympic torch relay through the capital Lhasa on Saturday to defend Communist Party control of the remote Buddhist region and denounce the exiled Dalai Lama.

The torch procession ended under tight security below the towering Potala palace after having been run for just over two hours before a carefully-selected crowd, some three months after the region was convulsed by bloody anti-Chinese protests.

"Tibet's sky will never change and the red flag with five stars will forever flutter high above it," Tibet's hardline Communist Party boss Zhang Qingli said at a ceremony at the end of the relay.

"We will certainly be able to totally smash the splittist schemes of the Dalai Lama clique," he added.

China accuses the Nobel Peace prize-winning Dalai Lama of inciting violence and trying to undermine the Beijing Olympics, which open on August 8. The Dalai Lama denies the charges.

The Beijing Games torch has never been far from controversy, and never more so than in its run through the streets of the 3,650-metre (12,000 feet) high city of Lhasa.

Police and troops lined the streets, closely watching the groups of residents chosen to cheer on the torch. Groups of students from Lhasa University waved Olympic banners, the Chinese national flag, as well as the hammer and sickle banner of the ruling Communist Party.

"We are convinced that the Beijing Olympic Games' torch relay in Lhasa will further inflame the patriotic spirit of the people," Lhasa's Communist Party boss Qin Yizhi said at the opening ceremony, adding it would also help "smash the scheming of the Dalai Lama clique".

But some students seemed hesitant in giving an answer when asked of the meaning of the torch passing through Tibet.

"I'm not sure of the meaning," said one ethnic Tibetan student, who declined to be identified. "I guess it's the first time the torch relay has been held in China's Tibet and that's something to be proud of."

"PROVOCATIVE DECISION"

For many exiled Tibetans and human rights groups, the Lhasa torch relay serves as a reminder of China's overbearing influence.

"This provocative decision -- with the blessing of the International Olympic Committee -- could aggravate tensions and undermine the fragile process to find a peaceful long-term solution for Tibet and the region," said Human Rights in China Executive Director Sharon Hom.

But for many Chinese, outraged by the March unrest and then the protests against China's rule in Tibet that dogged the international stage of the torch relay, the Lhasa stop of the torch is a moment of vindication.

"The torch is a symbol of China and Tibet is an inseparable part of China," said Chen Tao, a Han Chinese student who was cheering on the relay.

Baima Chilin, a vice chairman of Tibet's government, said supporters of the Dalai Lama wanted to upset the passage of the torch through the Lhasa, where protests and riots challenged Chinese control in March.

But he said he was sure the torch relay would not be troubled by protest, and called the relay a symbol of ethnic unity. "People of all ethnic groups in Lhasa greet the Olympic torch relay with immeasurable joy," he told a news conference on Friday.

The rings of security surrounding the torch were a constant reminder that even the government fears such joy is not universal.

Matt Whitticase of the London-based Free Tibet Campaign, which supports self-determination for the region, said making phone calls into Lhasa had become increasingly difficult as authorities sought to clamp down on potential protest around the torch.

(Writing by Ben Blanchard; Editing by Valerie Lee)