Saleh's new pledge is said to be a major concession which could change the political system in Yemen [GALLO/GETTY]

Ali Abdullah Saleh, Yemen's president, has promised to put a new constitution to a referendum this year and move the country to a "parliamentary system" but opponents say the move fails to meet the demands of anti-government protesters.

The Yemeni president said on Thursday that the new constitution would guarantee the separation of legislative and executive powers and prepare for the holding of new general elections that would assure an effective parliamentary rule.

"Firstly we will form a new constitution based on the separation of powers. A referendum on this new constitution will be held before the end of this year," he said.

"I'm already sure that this initiative won't be accepted by the opposition, but in order to do the right thing, I am offering this to the people and they will decide," Saleh said.

The president made the promise in a speech to thousands of people at a political rally in the capital Sanaa, a day after two people were killed in fresh unrest.

Hashem Ahelbarra, Al Jazeera’s correspondent in Sanaa, described the pledge as a major concession which could change the political system in Yemen since the embattled president also plans decentralisation of power – giving more say to the provinces.

After the planned new reform, parliament will decide the future of the country rather than the president, our correspondent said.

Opposition rejects offer

The opposition has, however, rejected the offer. Its spokesman said the president's offer came too late and it did not meet demands of protesters.

"This initiative is too late. The demands on the street go beyond that and are bigger than that," Mohammed Qahtan, the spokesman, said.

The opposition called for anti-government rallies to continue.

The president has already made a number of concessions to his opponents, but has refused to bow to their central demand that he relinquish power immediately, saying he wanted to see out his term which expires in 2013.

There have been widespread pro-democracy protests throughout the Arabian peninsula country over the past month demanding an end to his 32-year rule.

Army troops stormed Sanaa University campus, the epicentre of the protests, on Tuesday, shooting live ammunition, rubber bullets and firing tear gas. About 90 protesters sustained gas inhalation and minor injuries in the raid.

An alliance of parliamentary opposition groups condemned the police action and said that it held Saleh "personally accountable for the crime committed by the central security and the Republican Guard against the students".