Yemen is close to reaching a deal with northern Shi'ite rebels, a government official said, aiming to end a war that has raged on and off since 2004 and drawn in neighbouring Saudi Arabia.

The government and rebels have been exchanging proposals in recent days to settle the conflict, one of three that the government is fighting on its territory, and Sanaa was waiting for a final agreement from rebel leader Abdul-Malik al-Houthi.

'A deal is expected to be finalised soon with the Houthis to end the war,' the official told Reuters.

Yemen said last week it had handed the rebels from the Shi'ite minority a timetable for implementing the government's ceasefire terms, a week after rejecting their truce offer because it did not include a promise to end hostilities with Saudi Arabia.

Saudi Arabia, the world's largest oil exporter, was drawn into the conflict in November when the rebels seized some of the kingdom's territory, complaining that Riyadh was letting Yemeni troops use its territory for attacks against them.

Riyadh declared victory over the insurgents last month after they offered a separate truce, and said they had withdrawn from its territory. But rebels say Saudi airstrikes have continued.

The rebels said on their website that Saudi warplanes had carried out 13 attacks on northern Yemen on Wednesday, and they reported new clashes with Yemeni troops on at least two fronts.

As part of the truce deal with Yemen, Sanaa will allow representatives of the rebels to sit on a committee overseeing the truce and the insurgents agreed to hand over weapons they seized from the Yemeni and Saudi forces, Yemeni officials said.

The deadline for the full implementation of the truce had been a point of contention, with the rebels asking for more time for their fighters to leave mountainous positions, they said.

A mediator signalled on Tuesday possible progress in efforts towards a truce between Yemeni government forces and the rebels, who complain of social, religious and economic discrimination.

Qatar brokered a short-lived ceasefire between the government and rebels in 2007 and a peace deal in 2008, but clashes soon broke out again. Yemeni President Ali Abdullah Saleh unilaterally declared war again in July 2008 and full-scale fighting resumed a year later.

Al Qaeda threat

Impoverished Yemen is also struggling with a southern secessionist movement and cracking down on al Qaeda, whose Yemen-based regional wing claimed a failed bomb attack on a US-bound plane in December.

Western powers and neighbouring Saudi Arabia, the world's top oil exporter, fear that Yemen's growing instability may allow al Qaeda to strengthen its operations.

Yemen's foreign minister said Sanaa could protect its regional waters and would take threats seriously after al Qaeda's Yemen-based wing called for a blockade of the Red Sea and a regional jihad.

'The Yemeni government takes al Qaeda threats seriously, and the security apparatus will deal with them,' the Defence Ministry's online 'September 26' newspaper quoted Abubakr al-Qirbi as saying.

'The Yemeni government is responsible for protecting its regional waters and its security apparatus has proved that it is capable of doing this,' Qirbi was quoted as saying.

The Yemen-based wing of al Qaeda called this week for a regional Muslim holy war and a Red Sea blockade to cut off US shipments to Israel, a further sign of the group's ambitions to mount new strikes outside its base.

Yemen is located at the southern rim of the Arabian Peninsula, near one of the world's busiest shipping corridors.

Its southwest corner marks a narrow strait that, if blocked, would cut off access to Egypt's Suez Canal from the south. – Reuters