Myanmar's parliament has passed a bill allowing citizens to stage peaceful protests, a lawmaker said on Thursday, the latest in a string of reforms pulling the pariah state out of isolation.

The Peaceful Assembly and Procession Bill requires advance permission for would-be demonstrators but represents a major step in a country where just four years ago the army opened fire on peaceful mass protests led by Buddhist monks.

This bill allows peaceful assembly and procession by holding flags with prior permission from the authorities five days in advance, said Aye Maung, an upper house delegate and chairman of Rakhine Nationalities' Development Party.

Monks are also citizens so I think they can also join, he told Reuters.

The bill was passed on Tuesday and requires the ratification by President Thein Sein to become law, he said.

In recent months, Myanmar's new army-dominated parliament and government have surprised critics by introducing the most sweeping reforms in the former British colony since a 1962 military coup. They have included freeing more than 200 political prisoners and letting the media cover heretofore taboo topics like politics and crime.

In October, Thein Sein enacted a new Labour Law under which Myanmar's workers are entitled to stage protests and set up labour unions, both of which were banned under the junta that ruled the country with an iron fist until ceding power to parliament following elections last year.

Japan said on Wednesday it would hold working-level talks with Myanmar next week to discuss aid projects, another step in growing international involvement as the country moves tentatively towards democracy.

Last week, Myanmar won a powerful endorsement when U.S. President Barack Obama announced Secretary of State Hillary Clinton would visit Myanmar, citing flickers of progress.

(Editing by Jason Szep and Nick Macfie)