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Parliament Thursday legalized opposition parties and banned political organizing in the workplace - a further move toward making a Western-style democracy of a country under Communist rule for 41 years.

Legislators voted to banish parties from the shop and factory floor despite opposition from the ruling Socialist Party.At a congress last week that dissolved the Communist Party and replaced it with the Socialist Party that embraced democracy, delegates overwhelmingly approved a motion calling for the right to organize party cells in the workplace.

Under authoritarian Communist Party rule, such organizing has allowed the ruling party to maintain political control over industry. It was thus vigorously opposed by newly created opposition groups that are preparing for Hungary's first free national elections since the communists consolidated power in 1948.

The law passed Thursday also seeks to define what the Socialist Party owns by drawing the line between legally acquired funds and property and other assets its Marxist-Leninist predecessor merely controls or may have seized illegally.

The political opposition claims much of the party's wealth was seized illegally after 1948.

Under Communist rule, the party had controlled the government.

At least in theory, the new law opens the way for people who contend the government stole their property to seek its return.

Among other legislation enacted Thursday was a law creating a Supreme Court.

On Wednesday, Parliament established the office of president of the republic, who will replace the 21-man collective presidency. But the parliament sidestepped a controversy over when and how the president would be elected.

The current arrangement calls for the president to be chosen in a direct election for which Nov. 26 is the tentative date.

Opposition forces are calling for a delay until after the parliamentary elections that are to be held by June and want the new Parliament, where the opposition hopes for an overall majority, to choose the president.