Egypt's parliament will hold its own inquiry into violence during the uprising against Hosni Mubarak, the speaker said on Tuesday during a session that served notice that the army-led government will face close scrutiny from newly elected MPs.

Elected in Egypt's most democratic election in six decades, the Islamist-dominated lower house discussed on its second day of business ways to secure justice for the victims of violence during the uprising that unseated Mubarak.

It is a main demand of activists who have called for mass protests on Wednesday, hoping to use the first anniversary of the uprising against Mubarak to rally opposition to military rulers they say are obstructing real democratic reform.

In an apparent gesture to the reform movement, the military council said on Tuesday it would lift a state of emergency in place since 1981, though left in place a clause which meant its laws would still apply in some cases of thuggery, without spelling out what that meant.

Heba Morayef, the Egypt researcher for New-York based Human Rights Watch, described it as misleading, saying the exception to the law left wide scope for arbitrary detention.

Washington, which had hinted it could review its $1.3 billion in annual military aid after criticising Egypt's raids on pro-democracy groups and violence against protesters, welcomed it as a good step, but sought clarification about the exception.

Asked by reporters whether the emergency law's removal might be more cosmetic than substantive, State Department spokeswoman Victoria Nuland said: That is why we are going in to the Egyptians and asking for their clarity on this point and urging them to be absolutely clear with the Egyptian people.

WE WANT REAL JUSTICE

The military council will exercise Mubarak's presidential powers until the end of June, when, according to their own timetable, they will hand authority to an elected president.

In parliament, one lawmaker after another echoed the demand for an independent fact-finding committee into violence which killed around 800 people. No senior official has been found responsible for the violence.

Akram al-Sha'ir, whose son was injured in the protests, broke into tears during a passionate speech to the chamber now dominated by members of his Freedom and Justice Party (FJP), the party of the Islamist Muslim Brotherhood.

Mr. Speaker, it's been a year, where is the verdict? Tardy justice is oppression, he said.

We want real justice, he said, to a standing ovation.

FJP secretary-general, Saad el-Katatni, who was elected speaker of the parliament on Monday, said: The chamber will form a fact-finding committee after these discussions.

However, MPs wrangled into the night over who should be on the committee, as well as over the composition of other parliamentary sub-committees charged with overseeing everything from defence to health care.

Elections to decide who should sit on the committees were postponed when smaller parties withdrew in protest at what they said were FPJ attempts at domination.

The Brotherhood won nearly half the seats in the election that began in November and drew to a close this month, an outcome unthinkable just a year ago when the group was still formally outlawed by the Mubarak administration and parliament was no more than a rubber stamp for his decisions.

Mubarak is now standing trial, facing charges including ordering the killing of protesters during the 18-day uprising that ended when he handed power to the military leadership on February 11. But the prosecution has said a lack of cooperation from security authorities has hindered evidence gathering.

That charge - denied by the authorities - has strengthened the view of those Egyptians who worry that much of the Mubarak-era establishment is still in place and blocking reform.

One MP criticised Kamal al-Ganzouri, the prime minister, for failing to attend the session, saying his absence was reminiscent of the Mubarak days.

AN OCCASION FOR UNITY

Ganzouri, who served as a prime minister under Mubarak, was appointed by the military council in November. The FJP has signalled it will work with his administration for what remains of the transitional period.

With few representatives in parliament, the loose coalition of pro-democracy groups aim to increase pressure on the military council on Wednesday with mass protests they hope will recreate the uprising of last year.

The youth activist movement has grown ever more suspicious of the military council since it took power, accusing the generals of seeking to hold on to power and privilege.

The military council headed by Field Marshal Mohamed Hussein Tantawi has called for a day of celebration, not protests.

The January 25 anniversary will remain an occasion for unity among the people and the armed forces, which stood by their side, Tantawi said in a televised address.

He described the election of parliament as the first important step along the road of democratic change before announcing the partial end to the state of emergency - long a demand of the reform movement.

In another apparent move to deflect criticism ahead of the anniversary, the council last week pardoned nearly 2,000 people convicted in military courts since Mubarak was toppled.

(Additional reporting by Tamim Elyan; Dina Zayed and Ahmed Tolba; Writing by Tom Perry; Editing by Alison Williams)