TAIPEI, March 27 (Reuter) - Tibet's exiled spiritual leader, the Dalai Lama, ended his first visit to Taiwan on Thursday by appealing to the Nationalist-ruled island and his own Himalayan followers to find a compromise with communist China.

"I believe my visit here can promote closer understanding between the Tibetans and Chinese," the Tibetan Buddhist god-king told reporters after a meeting with President Lee Teng-hui.

"The Tibetan problem is neither good for Tibet nor for China," said the monk who has led a government-in-exile in India since a failed anti-Chinese uprising in Tibet in 1959.

"We must find a mutual solution," he said.

The Dalai Lama said that despite some Tibetan opposition, he favoured for his homeland the "one country, two systems" formula of wide local autonomy under China's sovereignty that Beijing will be pioneering in Hong Kong this year and hopes to spread to Taiwan.

"I believe very much in the spirit of one country, two systems," the 61-year-old monk told a news briefing, repeating that he sought only self-rule for Tibet, not independence.

"Some critics in the Tibet community question my position. Even my eldest brother expressed that my middle approach is actually selling Tibet's legitimate rights," he said.

Touching on the volatile issue of Taiwan's own independence, the 1989 Nobel peace laureate hinted strongly that he opposed it saying Taiwan's people had a right to choose their own fate but urging them to accept close links with China.

He said he told leaders of Taiwan's independence-minded Democratic Progressive Party (DPP) that the economy and defence transcended the right to cultural preservation.

"I told my DPP friends that the Taiwanese, regarding their own unique cultural heritage or identity, it is their right to preserve (them)," the Dalai Lama said.

"But in greater fields such as economy and defence, these are much larger issues... There should no longer be any independent economy of one country. The economy is now a global economy. Therefore, some kind of close link with mainland China should be there," he said.

"But ultimately it is up to the people the Taiwan issue."

China, deeply suspicious of the Dalai Lama and Lee, scorned their meeting even before it happened, as the collusion of "splittists" bent on independence for Taiwan and Tibet.

Beijing has regarded Taiwan as a rebel-held province since 1949, when the Nationalist government, defeated in a civil war on the mainland, fled into exile on the island.

The Dalai Lama called Lee "not only very friendly but a very spiritual person" and said the devout Presbyterian agreed with him on the need for spirituality in modern life.

Their meeting in a walled Taipei guest house sparked protests from across Taiwan's political spectrum.

"Lee and Dalai go ahead and meet but don't split China!" chanted anti-independence Labour Party activists.

Counter-protesters waved banners reading: "Taiwanese support free Tibet," "Tibetan and Taiwanese want independence," "We do not belong to China" and "Taiwan Country supports free Tibet."

Although Beijing calls Tibet an "autonomous region," it keeps the vast territory under tight political, social and military control, raising doubts in Taiwan about the sincerity of its "one country, two systems" model.

Taiwan has rejected the formula outright, saying it favoured reunification with the mainland only when Beijing embraces democracy.

During his six days in Taiwan, the Dalai Lama recited like a mantra his bargaining position that he sought only genuine self-rule for Tibet, not independence, that he was neither anti-Chinese nor anti-communist.

The Dalai Lama's lecture tour, billed as strictly religious, took on overt political tones when, while meeting Vice President Lien Chan on Wednedsay, he praised Taiwan's fledgling democracy even its parliament's renowned fisticuffs.

The visit was the Dalai Lama's first return to Chinese soil since he fled his Himalayan homeland in 1959.