Yemen's defence ministry and Shi'ite rebels have agreed to a ceasefire after clashes which have shaken the capital Sanaa and its outskirts, the country's official 26 September newspaper said.

Since the breakdown last week of a previous truce reached at the beginning of the month, government forces and allied tribesmen have struggled to halt the militants' advance on villages just 40 km northwest of the capital.

Policemen clashed with armed followers of the Houthi movement - named after their leader's tribe - in a standoff outside the group's political bureau in Sanaa on Saturday.

The ceasefire envisions reshuffling military and civilian leaders in areas affected by the fighting, compensating slain Houthi supporters and an investigation into the violence, a government statement published by the newspaper said.

US-allied Yemen, an impoverished country of 25 million that shares a long border with the world's top oil exporter Saudi Arabia has been in turmoil since 2011 when mass protests forced veteran president Ali Abdullah Saleh to step down.

At least 200 people have been killed this year in battles pitting the insurgents against the government and tribal allies.

Officials say the Houthis, who have fought short but devastating wars with government forces since 2004, are getting weapons from Iran. The rebels deny this, saying they seek autonomy and less U.S. interference in Yemen's affairs.

The fighting in northern Yemen, which has taken on a sectarian tone, has further unsettled a country struggling to overcome many problems, including a secessionist movement in its restive South and the nationwide spread of Al-Qaeda militants.-Reuters