Chad had threatened to stop oil output on Tuesday unless the World Bank released frozen Chadian oil royalties or a US-led oil consortium operating in the central African country paid at least $100 million.

But on Monday, the Chad government said it would relax the deadline, because it had accepted a US government offer to mediate.

A statement read on state radio said: "The government is happy to accept the American government's offer of mediation and has decided to grant the time proposed for this mediation by the US State Department, that is, until the end of April."

Idriss Deby, the president, dragged oil to the centre of Chad's political emergency on Friday by announcing the deadline for either the World Bank to unfreeze the funds or for the US-led oil consortium to pay.

Military pressures

"The government is happy to accept the American government's offer of mediation and has decided to grant the time proposed for this mediation...until the end of April"

Government statement

The announcement came a day after an assault by rebels on the capital, N'Djamena, in which several hundred people were killed.

The royalties have been frozen for five months in a dispute with the World Bank after Chad changed a law which allocated a share of revenues for social spending.

Chad said it needed to access the funds more quickly to cover other priorities, including spending on security.