(Repeats to edit headline, story updates with Nasheed, Gayoom quotes)

By Judith Evans

MALE, Oct 29 (Reuters) - The president of the Maldives for the past 30 years conceded electoral defeat on Wednesday to a former dissident he had repeatedly jailed during years of crusading for democracy on the tropical Indian Ocean archipelago.

Mohamed "Anni" Nasheed, victorious with 54.2 percent of a runoff vote held on Tuesday, stood with President Maumoon Abdul Gayoom in the office he inherits on Nov. 11, with both praising the Maldives' first multiparty poll as a testament to democracy.

Asia's longest-serving ruler, 71, made good on his pledge to leave peacefully and join the opposition, after a campaign in which he and his nemesis traded sharp accusations.

Gayoom garnered just 45.8 percent of the vote after Nasheed lined up the entire opposition behind him in the second round.

"In the life of a democracy this is a great moment, a great example by Maldivians. I accepted the will of the people," Gayoom said. "My legacy is going to be introducing a modern, liberal form of democracy. That is the greatest legacy anyone can give."

Nasheed's victory caps a remarkable journey for an activist whose criticism of Gayoom and crusading for democracy saw him charged 27 times and jailed or banished to remote atolls for a total of six years.

"This is a happier day than ever in the history of the Maldives. The Maldives will change, it will have a peaceful government," said Nasheed, 41, who was just 11 years old when Gayoom took power in 1978.

He said he had no plans to pursue criminal charges against Gayoom, whom he had accused of corruption, but instead will arrange a pension and security for him.

"A test of our democracy will be how we treat Maumoon. I don't think we should be going for a witchhunt and digging up the past," Nasheed said.

The vote is the culmination of years of agitation for democratic reforms on the string of 1,192 mostly uninhabited coral atolls 800 km (500 miles) off the tip of India, peopled by 300,000 Sunni Muslims.

DEMOCRACY RISES

With the country's international reputation as a diving hotspot and luxury hideaway for Hollywood stars and others ready to pay thousands of dollars for a night's stay, Gayoom had been criticised for ruling like a personal sultanate.

After early returns showed Nasheed ahead, many of his supporters lined the seawall in the capital, Male, to celebrate in the early morning sun.

Nasheed was at the forefront of the campaign for democracy, including the 2004 protests that prompted a brutal crackdown by security forces and drew rare international criticism, and attention, to the hideaway islands.

Gayoom won the Oct. 9-10 first-round election, but fell short of the 50 percent needed to avoid a runoff.

It was the first time Gayoom had faced opposition at the polls since first being elected in 1978. In each of his six previous votes, he stood alone for a yes-no nod from voters and said he was re-elected by more than 90 percent each time.

This time, 86 percent of the tiny nation's more than 209,000 registered voters cast their ballots.

Although there were complaints about registration and fraud as in the first round, poll observers praised the exercise.

Gayoom is widely credited with overseeing the Maldives' transformation from a fishing-based economy to a tourism powerhouse with South Asia's highest per-capita income.

But Nasheed argued that only a small clique around Gayoom grew rich amid corruption in his government, which Gayoom denies. Nasheed will take over an economy that earns 28 percent of its GDP directly from tourism but which is under IMF pressure to ease debts and trim a huge government payroll. Tourism is expected to suffer from the global financial crisis.

The archipelago also faces high child malnutrition, growing Islamic extremism, a major heroin problem, and rising sea levels that could see much of its land mass underwater by 2100, if a U.N. climate change panel's predictions are right.

Nasheed will also inherit a presidency with far fewer powers, thanks to the very changes for which he campaigned.

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