Michele Cervone d'Urso, the EU's ambassador to Yemen, says new government 'days' away [AFP]

Yemen's prime minister-designate, Mohammed Basindawa, is expected to announce a national unity government within two days, a European diplomat and a Yemeni official said on Sunday.

The government "will be formed within the next couple of days, and if they do it today it is even better," Michele Cervone d'Urso, the EU's ambassador to Yemen, said.

Yemen's outgoing deputy information minister, Abdo al-Janadi, said on Sunday: "According to my information, the government should be announced today."

Half of the government must be opposition members while regime loyalists make up the other half, based on a Gulf-brokered and UN-backed power transfer plan which President Ali Abdullah Saleh signed on November 23.

Cervone said that a military commission, which under the agreement is to oversee a restructuring of the security services and the withdrawal of gunmen from the streets, would also be formed "with the next couple of days."

The opposition warned on Saturday that it will not go ahead with forming a unity government until the military commission is formed and fighting stopped in Taiz where 31 people were killed in clashes between the army and dissident tribespeople.

State media reported later the same day that a ceasefire had come into effect after a call by Vice President Abdrabuh Mansur Hadi for an end to the fighting which broke out on Thursday and for a pullout of troops and other fighters.

Saleh signed the Gulf-brokered deal last month in Riyadh under which his powers were passed on to his deputy, although he remains honorary president until February.