CAPE TOWN, Aug 22 (AFP) - Exiled Tibetan spiritual leader the Dalai Lama on Thursday presented a flowing white silk scarf to President Nelson Mandela and hailed him as the successor to Mahatma Gandhi.

The scarf, made of silk from China but crafted in Tibet, the Dalai Lama explained to reporters outside Mandela's Tuynhuys office here, symbolised harmony.

The two leaders emerged hand-in-hand after short talks at Tuynhuys and strolled through the property's picturesque gardens, which is overlooked by Cape Town's imposing Table Mountain.

"It is a great honour for us South Africans to receive his Holiness," Mandela said.

"He is known throughout the world for his commitment to those values to which every decent human being is striving for. He stands for peace, for justice and for all concepts that make life worth living.

"He comes to our country at a very critical moment when we are trying to create a a non-violent and peaceful transformation," Mandela added. "I am sure his Holiness will contribute to the creation of that environment where we can successfully address all our problems."

The Dalai Lama, dressed in Buddhist robes, said he was "very, very happy, extremely happy" to meet Mandela.

"There are millions of people who admire this person," he said, referring to Mandela. "I am one of them.

"I think President Nelson Mandela is a very good example," he said before turning to Mandela and adding: "In the past, Mahatma Gandhi made a very good example to humanity and you are the successor of that great person.

"I wish that all your hard work will succeed and benefit not only people in this country but all humanity. I think you can be a very good example."

The Buddhist leader said he believed conflicts and problems which remain in South Africa can be overcome through non-violence and tolerance.

"Our next century should be a century of dialogue, not a century of war, of bloodshed," the Dalai Lama said. "The best way to halt conflict between nation to nation, or neighbour to neighbour, or person to person is through non-violence, through dialogue."

During their stroll, Mandela and the Dalai Lama paused to greet a group of excited schoolchildren who had gathered at a gate to the property.

After the spiritual leader had signed autographs and the political leader had wished the children well in their examinations, the two men, still hand-in-hand, returned through the gardens to the historical building.

The Dalai Lama, who has been living in exile since China's occupation of Tibet in 1959, is in South Africa to attend two peace rallies in Johannesburg and Pretoria later in the week.

The Tibetan leader campaigns worldwide against what his followers call the oppressive Chinese occupation of his Himalayan homeland. Beijing contends that Tibet is an integral part of Chinese territory.