By Timothy Heritage

MOSCOW (Reuters) - Alexei Navalny has thousands of Russians chanting his name within minutes of stepping onto the stage at a boisterous campaign meeting in the race to become Moscow's mayor.

"Can we win this election?" the opposition leader, one of President Vladimir Putin's biggest critics, shouts through a microphone on a makeshift stage outside a Moscow park.

"Yes!" comes the even louder cry from the crowd on a damp summer evening in the Russian capital.

Such scenes are common in Western elections but Navalny's campaign, based on working crowds, mobilizing thousands of volunteers and pressing the flesh, is still a novelty in Russia more than two decades after the collapse of the Soviet Union.

The stakes in Sunday's election are high - both for the opposition, which is struggling to revive the momentum of its challenge to Putin, and for the Kremlin.

After a trial that he and his supporters say was politically motivated, Navalny was convicted in July of stealing timber from a state firm and sentenced to five years in prison. In a highly unusual ruling, a judge released him on bail the following day.

Many political observers say the Kremlin wanted Navalny to run in Moscow because it expected him to be humiliated, and believed this would remove him as a political threat.

But Navalny's campaign has had more impact than expected and the gamble is in danger of backfiring on the Kremlin, even though its candidate Sergei Sobyanin is still expected to win.

"The moment any competition was allowed, the moment they let Navalny run, the situation started getting out of the Kremlin's control," said independent political analyst Pavel Salin.

STAID CAMPAIGN

Sobyanin has hardly moved out of first gear in a campaign that harks back to the Soviet system - based largely on staid meetings with officials and voters, blanket television coverage and the avoidance of live debates with the other candidates.

He has let his work as mayor since 2010 do the talking for him - the smart new pedestrian walkways, modern buildings, better car parking and bicycles for hire on street corners.

Backed heavily by state media, Sobyanin is confident that Navalny, 37, has no chance of beating him. Even if he did, it seems unlikely that he could take up the job: unless he wins an appeal, he will start his prison term soon after the election.

In an interview with the Associated Press and Russia's state TV, broadcast on Wednesday, Putin said: "The federal authorities will work with any future Moscow mayor, whoever is elected by Muscovites, that is an absolutely obvious fact."

But the former Soviet spy also said he believed Navalny was not fit for the job because he lacked experience to run the city of nearly 12 million people.

"And in general, when somebody talks of fighting corruption, he himself should be crystal clear first and foremost," Putin said. "But that is problematic."

Navalny's campaign, however, has already left a mark by lifting the opposition's morale, sapped by its failure to force out Putin in protests last year, and undermining the notion that the Kremlin can steer the course of elections as it pleases.

Just preventing from Sobyanin securing more than half the votes on Sunday, and forcing him into a run-off, would be a triumph for Navalny and would likely alarm the Kremlin.

"A second round would be disastrous for the entire political system built by Putin," Navalny's campaign chief, Leonid Volkov, said. "In any case, the campaign has already resulted in total upheaval in the country's political landscape."

POLITICAL SPRINGBOARD

Six candidates are fighting for the right to control Russia's biggest and wealthiest city, its main financial centre and the seat of most big Russian companies.

The campaign has been dominated by issues such as housing, transport, jobs, education, corruption and what to do about an unpopular influx of Central Asian migrant workers who do many of the unskilled and lowly paid jobs in the capital.

Power in Russia is concentrated in the hands of the president but the Kremlin takes a risk if it ignores the person who runs the city with an annual budget of 1.8 trillion roubles ($54 billion).

Yuri Luzhkov, mayor from 1992 until 2010, used Moscow as a power base but became such an irritant that the then president, Dmitry Medvedev, fired him. Boris Yeltsin treated the job, which in Soviet times went under the title of first secretary of the city communist party, as a springboard to Russia's presidency.

Sobyanin, 55, is a former head of the presidential administration who was chosen by the Kremlin to replace Luzhkov and is widely seen as a potential prime minister under Putin.

Sobyanin "is a very experienced person, calm, he doesn't like publicity very much, he's known to even be taciturn. I like such people. He talks less, does more," Putin said.

Navalny, who made his name as an anti-corruption campaigner, has presidential ambitions as well and also sees the mayor's job as a stepping stone to bigger things. He is campaigning under the slogan: "Change Russia, Start with Moscow."

That is a tough task. Protests which began against Putin in big cities in late 2011 failed to take off in the provinces and faded after Putin won a presidential election in March 2012.

But Navalny, who led the Moscow protests, has revived some of the enthusiasm for change among urban youth with his unusually open campaign, taking questions from voters that - in a rarity for Russian politicians - are not orchestrated.

"He's different and the only person I can see who can make a difference. Without him, there's no one to vote for," said Katya Volkova, a student attending one of Navalny's campaign meetings.

LONG STRUGGLE AGAINST THE KREMLIN

Navalny has a tougher time winning over older voters wary of more upheaval after the chaos that followed the collapse of the Soviet Union. Opponents accuse him of harboring dangerous xenophobic views and of being a Western stooge - charges he rejects, despite his tough talk of limiting immigration.

He also faces allegations of illegally securing funding from abroad, which he denies. Since announcing his candidacy, he has twice been briefly detained by police, who have also raided a flat where he kept campaign materials.

The Kremlin denies manipulating elections and dismisses allegations by Navalny that the Moscow ballot will be rigged against him. It holds up the fact that he is running as evidence that it is an open race.

Opinion polls show Putin remains Russia's most popular politician and Navalny still has little appeal outside major cities. The president is in no immediate danger of being ousted, the opposition is split, and Putin has tightened his grip with new laws that critics say are designed to smother dissent.

But Navalny's supporters portray his campaign as part of a long-term battle that offers them new hope.

"He may not win but the important thing is to show there is opposition to Putin," said Anna Ivanova, a housewife in her twenties attending a Navalny campaign meeting.

(Additional reporting by Gabriela Baczynska, Maria Tsvetkova, Alissa de Carbonnel and Steve Gutterman)