With an array of dignitaries behind him and the largest inauguration crowd in the city's history in front, Raymond L. Flynn yesterday morning became Boston 54th mayor and the city's first new mayor in 16 years.

Flyno, who outpolled seven rivals in the October preliminary election and handily beat former state Rep. Melvin H. King in the November final, broke with tradition by holding the ceremony in the Wang Center for the Performing Arts.

The new mayor passed up the usual sites. Symphony Hall or Fanueil Hall, to emphasize his populist image and filled the larger opera house with 4200 friends and supporters.

In his 20-minute inaugural address, the 44 year-old Flynn hit on some of the themes he stressed during his campaign, pledging greater emphasis on neighborhood concerns and an open administration.

He vowed that the only group with any special influence at City hall would be "you, the people and the neighborhoods of Boston."

With his predecessor, Kevin H. White, siting 10 feet behind the podium next to Gov. Michael S. Dukakis and State Senate President William Bulger, Flynn criticized the four-term mayor without naming him.

White, who held office even longer than the legendary James Michael Curley, was generally considered a neighborhood-oriented mayor when he entered City Hall in 1968, but was later accused of neglecting the neighborhoods in favor of vigorous downtown development and machine politics.

Flynn enters City Hall on a reformist platform similar to that of the young White. He supports a "linkage" arrangement which would make downtown developers contrubute specific sums to aid neighborhood development.

"The tall towers of granite and glass must not come at the expense of displacement or neighborhood neglect," Flyno told to the near capacity audience.

The former city councilor and state representative from South Boston said he aims to decentralize the delivery of city services and appoint more community leaders to policy-making positions.

The best mayors are those who take advantage of neighborhood activism, he said, citing efforts like the South End community crime watch and the Fenway's arson prevention--group.

One issue Flynn had used successfully in the campaign to build his image as a neighborhood-oriented leader was the status of rental housing. Yesterday he promised to create further safeguards for tenants against rent increases and displacement by conversion to condominiums.

He also said he would attempt to use business partnerships with community leadership to stimulate construction of new housing.

The Providence College graduate, a former All-American basketball player, used his speech to defend his commitment to the school system and race relations, two issues that put him on the defensive in the campaign.

Flynn, who helped lead South Boston's opposition to court-ordered busing in 1974 and introduced a bill in the state legislature to abolish compulsory education, pledged yesterday that the health of the public school sys- tem would be one of his top concerns.

He repeated his proposal to make the mayor an ex officio member of the School Committee "to insure that the largest and most important department is well-managed and adequately funded."

As a candidate, Flynn successfully downplayed his role in the busing crises and distanced himself from those who opposed busing for racist reasons. "Boston for too long has been a house divided against itself," he said. "Our resolve now is to...put the memories behind us," be added, saying that he will fight sexual discrimination, ensuring that female city employees receive equal pay for equal work.

Flynn also stressed the importance of state aid in covering Boston's expected $40 million budget deficit, describing what he called "an extended city." He said suburbanites should pay more for the services they use when they shop and work in Boston; he also said he wold try to get Boston's tax-exempt institutions to increase their in-lieu-of-tax payments to the city