JACKSON, Miss., April 17— Faced with a choice between the Old South and the New, Mississippi voters today overwhelmingly selected a 107-year-old state flag that contains the Confederate battle cross in its upper corner, leaving their state the only one to display the divisive symbol on an official banner.
With 94 percent of the ballots counted late tonight in the statewide referendum, 456,113 voters, or 65 percent, favored keeping the current flag and 246,220 voters, or 35 percent, favored a new flag with a circle of white stars replacing the cross. The flag with the cross had been considered the state flag since 1894, but last year the State Supreme Court ruled that technically it had not been an official symbol since 1906.
In choosing the current design, voters rejected the argument of many political and business leaders that it was retarding the state's economic progress, limiting outside investment and tourism by projecting a retrograde, backwater image. Many black lawmakers and community leaders have worked for decades to rid the state of the flag design, a Civil War relic they consider a coded emblem of support for racism.
Many voters, in fact, said they supported the current flag precisely because it was opposed by outside interests, fearing that surrendering to such demands would inevitably lead to erosion of what they consider to be the region's heritage.
''I like the old flag,'' said Norma Patton, 58, of Flowood. ''It's silly to change something that's not broke. Changing it would just hurt race relations. I don't think anything helps that stirs it all up.''
Supporters of the new design said they did not think the vote would be the last effort for change, although many believed it could be many years before Mississippi joined the rest of the South in putting aside emblems of its Civil War passions.
''It wasn't a real surprising vote,'' said Blake Wilson, president of the Mississippi Economic Council, which helped lead the effort for a new flag. ''This is a long-term issue, and the people of Mississippi just need more time to get there.''
Former Gov. William F. Winter, who led the commission that designed the new flag, said that while he was disappointed in the result he was encouraged by how many voters had supported what he called ''a symbol of unity'' for the state.
Passionate debates over the use of Confederate symbolism have roiled the governments of several Southern states in recent years, after black leaders assembled their growing political power and used the threat of boycotts and legislative stalemates to prod white legislators into action. Within the last year alone, the governments of South Carolina and Georgia have voted to reduce, but not fully eliminate, the official presence of the Confederate symbol. Both did so without consulting voters.
The use of a referendum, in fact, was proposed by battle-flag supporters in both of those states as a way to keep the symbol alive by taking advantage of every Southern state's white and generally conservative majority. But only in Mississippi did the Legislature choose to let the voters decide. At the time of that decision, in January, both sides acknowledged that the Legislature would have voted to keep the Confederate symbol, so supporters of change decided to take their chances at the ballot box.
The campaign that was waged in favor of the new flag, however, deliberately shied from the issues of racial history surrounding the Confederacy, and focused instead almost entirely on the economic argument.
''It's not right that our kids can't find good jobs close to home because companies won't locate in our state, but it's a fact,'' said one flier mailed by a pro-business political action committee. ''They have the wrong idea about Mississippi. A state flag that includes the Confederate flag just adds to those false opinions.''
But polls repeatedly showed that voters did not accept the argument that the state's economic future was tied to its banner. The main reasons cited by supporters of the old flag were its place in Mississippi history and pride in their Southern heritage.
''The economic argument didn't work because they could never name a single business that left the state of Mississippi or didn't come here because of the flag,'' said Greg Stewart, a lawyer from Tunica who helped lead the campaign to keep the Confederate symbol. ''And the racism argument didn't work because all these white liberals were lumping all black people together as helpless victims, and that didn't go over too well with anyone.''
Blacks represent only about a third of the state's electorate, and their support alone would not have been enough to select a new flag. Several counties in the predominantly black Delta area voted heavily for the new design, while suburban counties and those in white rural areas provided the solid majority against it.
And despite the rallying efforts of the state's N.A.A.C.P. branch along with many black preachers and political leaders, there were persistent indications throughout the campaign that many black voters did not feel particularly energized about changing the flag and would not turn out in great numbers to the polls.
Hezekiah Watkins, 53, the owner of a small grocery store in Jackson, said he was discouraged that many young voters, black and white, seemed to lack interest in the issue.
''I'm from the old school,'' Mr. Watkins said. ''I was a freedom rider. The other side would hold the rebel flag. It was always a sign of segregation and hatred.''
The need for change was endorsed in recent weeks by editorials in many of the state's largest newspapers, in comments made by Gov. Ronnie Musgrove, and endorsements from well-known figures like the actor Morgan Freeman. In a statement tonight Mr. Musgrove called on the state to accept the majority vote and move on.
'We must now put aside our differences as we continue to create a state that provides a good quality of life for our people,'' he said.
Many of the same groups that defended the Confederate symbol in other states also worked hard to keep the flag in Mississippi. And older residents, in particular, expressed a sense that a symbol they honored while growing up should not be wrested away.
''I just think the flag we've got now served its purpose well for the last 100 years,'' said Shelby Patterson, 64, who is retired and lives in Jackson. ''I don't see any reason to change it. The flag they want -- it's got no sentimental value to nobody.''
Photo: Shea O'Mire of Brandon, Miss., joined others yesterday on U.S. 51 in urging drivers to support the state flag. (Chris Todd/The Clarion-Ledger)