Yemen's president has appointed the country's UN envoy as new prime minister, in a move welcomed by Houthi rebels who control the capital.

President Abd-Rabbu Mansour Hadi named Khaled Bahah as prime minister on Monday, just days after the Houthis rejected the appointment of Ahmed Awad bin Mubarak.

Signalling an easing in the country's prolonged political crisis, Abdelmalek al-Ejri, a member of the Houthis political bureau told the Reuters news agency, "he [Bahah] is the right person."

"His appointment will help the country overcome the difficulties it is going through," he said.

Bahah will have 30 days to form a government after rival political groups gave their backing to his selection, state media reported.

Born in 1965, Bahah is from the southern Hadramout province. He holds a masters degree in administration, business and finance; and previously served as oil minister before being appointed Yemen's envoy to the United Nations.

The appointment is part of a peace deal brokered by the United Nations after Houthis swept through Sanaa and took over army barracks, ministries and vital state institutions last month.

The power-sharing deal aims to bring the Houthis and the wing of a separatist group into a more inclusive government.

The Houthis, also known as Ansarullah, are a Zaidi Shia group who make up 30 percent of Yemen's population and ruled a kingdom in the country's north for 1,000 years.

The rebels have been trying to enlarge their zone of influence since January by pushing out from their mountain strongholds in the far north to areas closer to the capital.

Yemen has faced a troubled transition after long-time President Ali Abdullah Saleh was ousted in 2012 following a year of protests.

Source: Agencies