(Reuters) - A U.S. judge ruled on Monday the New York Police Department's "stop-and-frisk" crime-fighting tactic was unconstitutional, dealing a stinging rebuke to Mayor Michael Bloomberg, who vowed to appeal the ruling.

U.S. District Judge Shira Scheindlin called it "indirect racial profiling" because it targeted racially defined groups, resulting in the disproportionate and discriminatory stopping of tens of thousands of blacks and Hispanics while the city's highest officials "turned a blind eye," she said.

"No one should live in fear of being stopped whenever he leaves his home to go about the activities of daily life," Scheindlin wrote in her opinion.

But Bloomberg stood his ground. "People also have a right to walk down the street without being killed or mugged," he said at a news conference, repeating his conviction that the program resulted in a drastic reduction in crime that made New York the "poster child" for safe U.S. cities.

Political pundits said the ruling would tarnish Bloomberg's legacy and may trip up NYPD Commissioner Raymond Kelly, who President Barack Obama has indicated may be a possible nominee for U.S. secretary of homeland security.

"It will be a heavy lift to designate someone who's been excoriated by a federal judge for civil rights violations," said Eugene O'Donnell, a former police officer and prosecutor who is a professor at New York's John Jay College of Criminal Justice.

As part of her ruling, Scheindlin ordered the appointment of an independent monitor and other immediate changes to police policies. Her "remedies" address two lawsuits, one brought by the New York Civil Liberties Union (NYCLU) and the other by the Center for Constitutional Rights.

Several black and Hispanic men named as plaintiffs gathered at a CCR press conference, some choking back tears as they cheered the ruling for exposing racial profiling by U.S. authorities.

"When I got the call this morning the first thing I did was cry," said David Ourlicht, 25, who was stopped at St. John's University in Queens in 2008, ostensibly for walking in a suspicious way with a bulge under his winter clothing.

"It's a really good picture of what's going on in society," said Ourlicht, who is a mixed race man of black and white heritage.

Bloomberg told reporters his administration will appeal the ruling. That will take place as soon as the monitor makes any kind of request, at which time the city will seek an immediate stay pending the outcome of the appeal, said Corporation Counsel Michael Cardozo.

Bloomberg has resisted interference in his police policies, especially that of stopping, questioning and frisking anyone for "reasonable suspicion" in high-crime areas. An added benefit, he said at the press conference, was "the possibility of being stopped acts as a vital deterrent."

The mayor has sought to preserve a legacy that includes a 30 percent reduction in violent crime since 2001, the year he was first elected. Bloomberg will leave office on January 1 after 12 years in office.

All four leading candidates in next month's Democratic mayoral primary have taken a stand against "stop and frisk," but none of them has said they would abolish the police practice.

The judge, who presided over the nine-week trial without a jury, ruled that the effectiveness of "stop and frisk" was irrelevant.

"Many police practices may be useful for fighting crime -preventive detention or coerced confessions, for example - but because they are unconstitutional, they cannot be used, no matter how effective," the ruling said.

Scheindlin's ruling was not surprising. She has almost single-handedly overseen lawsuits against the NYPD's stop and frisk program after being randomly selected to preside over a lawsuit following the 1999 shooting of Amadou Diallo, an unarmed black man, by the NYPD's now-disbanded Street Crime Unit. Police Commissioner Kelly has complained that Scheindlin favors civil liberties groups.

In her ruling, Scheindlin said police officers felt pressure to increase the number of stops after Bloomberg took office in January 2002 and brought in Kelly as police commissioner.

As a result, officers often frisked young minority men for weapons or searched their pockets for contraband before letting them go, in a violation of the Constitution's Fourth Amendment that protects against unreasonable searches and seizures, the judge said in her 195-page decision.

The judge selected as the monitor Peter Zimroth, 70, who once worked as the city's top lawyer from 1987 to 1989.

The judge also ordered the NYPD to adopt a written policy specifying circumstances where stops are authorized; adopt a trial program requiring the use of body-worn cameras in one precinct in each of the city's five boroughs; and to set up a community-based remedial process under a court-appointed facilitator.

(Additional reporting by Joseph Ax, Chris Francescani, Jonathan Stempel, Francesca Trianni and Jonathan Allen; Editing by Daniel Trotta and Eric Walsh)