Yemen's Houthi Shia activists are continuing to protest in the capital Sanaa, a day after the country's president reached out to them by dismissing the government and rolling back a disputed fuel price hike.

Houthi supporters on Wednesday brandished arms and batons while using tyres and cement blocks to divert traffic from main roads, including a boulevard that leads to government buildings and state institutions.

Government tanks were positioned in front of the parliament and TV buildings.

The disruption of traffic came a day after Yemeni President Abed Rabbo Mansour Hadi dismissed the cabinet and announced a reduction of fuel prices in an attempt to resolve the crisis.

"Escalate! Escalate! We reject the initiative," read a banner carried by protesters. "The people want to topple corruption," they chanted.

Speaking at a cabinet meeting on Wednesday, Hadi warned of "violence and chaos" and vowed that "we will work on achieving security and stability across the country and we will not be lenient regarding the security of the capital Sanaa."

The presidential initiative stipulates naming a new prime minister within a week and reducing a recent fuel price hike, two demands of the rebels who accuse the government of corruption.

The rebels' spokesman, Mohammed Abdulsalam, dismissed the initiative as an attempt to "skirt around the demands of the Yemeni people," writing on his Facebook page that the rebels "do not agree to it".

The initiative comes after rebel leader Abdulmalik al-Houthi on Sunday urged supporters to press on with a campaign in Sanaa to oust the government.

Houthis have been camped around the capital for the past two weeks and held protests throughout much of August to push for the government's resignation.

Source: Agencies