Yemen has launched a $1.2 billion fund to give back tens of thousands of southern Yemenis jobs they lost after the 1994 civil war, a minister said on Tuesday, part of efforts to revive talks aimed at ending longstanding political divisions.

International Cooperation Minister Mohammed Al-Sa'adi said the fund, agreed on Sunday, had persuaded southern separatists to return to talks they boycotted last month in protest against the government's handling of their demands.

Restoring stability to Yemen, which shares a long border with top oil exporter Saudi Arabia, became an international priority after a US-backed power transfer deal eased veteran President Ali Abdullah Saleh out of office in November 2011.

As well as southern demands to restore the formerly Marxist state that merged with north Yemen in 1990, northern Shi'ite Muslim rebels are seeking to restore the Zaidi imamate that ruled much of modern Yemen before it was overthrown in 1962.

Sa'adi said Qatar would contribute $350 million to the fund, which will be used to rehire or compensate tens of thousands of civil servants and soldiers sacked after North Yemen won the civil war.

Qatar played a key role in financing Arab uprisings which resulted in four heads of state stepping down, including Saleh, and has supported governments established since then.

But a source at Qatar's foreign ministry declined to confirm if Qatar had pledged the $350 million.

Yemen's President Abd-Rabbu Mansour Hadi and the United Nations envoy to the country, Jamal Benomar, had approached Qatar for financial support in recent months.

Yemen was expected to ask international donors to cover the remaining $850 million at a meeting in New York on September 25.

A Western diplomat said earlier that the Southern Herak separatists had agreed to return to talks after assurances made through Benomar that their demands would be met. The talks resumed on Monday.

Benomar has played a key role in bringing various factions together at the conference, launched with much fanfare earlier this year.

"Part of the assurances is setting up a special fund to deal with tens of thousands of southerners who were expelled from their jobs under Saleh's rule from their civilian and military jobs," the diplomat said.

A separate fund will be set up to address the issue of property seized since the war, which erupted four years after North Yemen merged with the south, the diplomat added.

The West's preoccupation with Yemen is more often focussed on a major threat from Al Qaeda in the Arabian Peninsula (AQAP), described by US officials as one of the most active wings of the network founded by Osama bin Laden.

The group has launched a series of attacks against Yemeni security installations and targeted officials in a campaign that appeared designed to derail Hadi's efforts to restore state control over the country.

In the latest attack on Monday, two explosive devices targeting military buses went off near Sanaa airport, damaging the vehicles but causing no casualties, security sources said. - Reuters