Kazakh President Nursultan Nazarbayev on Tuesday overturned a decision to cancel parliamentary elections in the mutinous oil town where deadly riots have posed the biggest threat to stability in the ex-Soviet republic since independence 20 years ago.

By vetoing the Constitutional Council's decision, Nazarbayev will allow residents of Zhanaozen to participate in a January 15 vote designed to give Kazakhstan a democratic veneer by admitting a second party to the lower house of parliament.

Later on Tuesday election officials barred two prominent opposition figures from their own party's candidate list.

The president's office said Nazarbayev did not want the residents of Zhanaozen, near the Caspian Sea, to be denied their constitutional rights.

The president of Kazakhstan took into account the disquiet and concern of Zhanaozen's residents at the fact their electoral rights were limited by the Constitutional Council's decision, the presidential administration said in a statement.

Violence in Zhanaozen shattered the image of stability prized by Nazarbayev after two decades of rule during which he has prioritised economic growth and market reforms over democracy in Central Asia's largest economy and oil producer.

Nazarbayev is trying to make himself a man of the people, but at the same time is having to go against the apparatchiks who are looking for a more hardline approach, said Kate Mallinson, senior analyst at political risk consultants GPW.

Analysts said the council's original decision may have been motivated by ruling party fears of a heavy defeat in the town.

Zhanaozen, 2,750km (1,700 miles) from the commercial capital Almaty, will remain under a state of emergency until January 31 after a strike by oil workers that started in May erupted into clashes between riot police and protesters on December 16. Officials say 16 people were killed in the town and more than 100 wounded.

SECOND PARTY

Nazarbayev has cited the need for a multi-party parliament in his country of 16.6 million people. He won a fresh five-year mandate last April with 96 percent of the vote.

While the dominant Nur Otan party is still expected to win a comfortable majority, the unrest has dented confidence in the authorities among some in the far-western region.

In response to the clashes, Nazarbayev fired his son-in-law from the head of the sovereign wealth fund, as well as the heads of the state oil company, its London-listed production unit and the governor of the Mangistau region, where the clashes took place.

Kazakhstan's marginalised opposition had criticised the decision to cancel the elections in Zhanaozen and called for a nationwide boycott of the poll. Some parties critical of Nazarbayev have had their registration denied or suspended.

On Tuesday, the Central Election Commission removed Bolat Abilov, a leader of the opposition Social-Democratic Party, and fellow party member Gulzhan Yergaliyeva from the party list for allegedly making inaccurate declarations of income and property.

Though the party can stand in the election, Abilov and Yergaliyeva -- who said the move was an attempt to discredit her -- can no longer be nominated as deputies. The election commission also barred candidates from four other parties, including one from Nur Otan.

Most analysts expect the runners-up to be Ak Zhol, a business-friendly party that poses no direct challenge to Nazarbayev and has risen rapidly to become the second-largest political party by membership.

(Additional reporting by Robin Paxton and Mariya Gordeyeva in Almaty; Editing by Ralph Gowling and Ben Harding)