U.S. President Barack Obama said on Thursday Myanmar had opened a dialogue on reform but needed to do more to improve human rights in his first remarks about the authoritarian regime after the Southeast Asian nation released political prisoners.

A senior Myanmar Home Ministry official told Reuters on Wednesday that the new civilian government was ready to release more political prisoners after freeing about 230 activists on October 12, a further sign that genuine reform could be underway after five decades of harsh military rule.

Some political prisoners have been released. The government has begun a dialogue. Still, violations of human rights persist, Obama said in a speech to the Australian parliament.

So we will continue to speak clearly about the steps that must be taken for the government of Burma to have a better relationship with the United States.

The United States, Europe and Australia have said that freeing political prisoners is one of several preconditions to lifting sanctions that have isolated Myanmar and driven it closer to China.

Obama is in Australia ahead of visiting the Indonesian island of Bali for the East Asia Summit, and to signal a closer U.S. engagement with the Pacific.

Myanmar President Thein Sein, seen as having a reformist agenda, is already in Bali for a summit of the Association of South East Asian Nations (ASEAN).

The senior Myanmar official said the authorities were preparing very soon to release political prisoners for the second time in just over a month under an amnesty.

Another amnesty would boost Thein Sein's image and strengthen his case for Myanmar taking the rotating ASEAN presidency in 2014, two years ahead of schedule -- a bid widely seen as an attempt to legitimise the new political system.

Myanmar's National League for Democracy, headed by Nobel Peace Prize laureate Aung San Suu Kyi, is expected to decide on Friday whether to re-register as a political party to contest imminent by-elections.

Suu Kyi's party welcomed ASEAN's expected endorsement on Thursday of Myanmar's chairmanship and said it would help to drive political change.

Their decision is tantamount to encouraging the present Myanmar government to step up the momentum for reforms, Nyan Win, a senior official in Suu Kyi's National League for Democracy, told Reuters in Myanmar's biggest city, Yangon.

I think that Myanmar's political activities will become more vibrant after assuming the chair and Myanmar will also become a quality member of ASEAN.

HUMAN RIGHTS

In his speech, Obama said the U.S. would continue to champion human rights.

Every nation will chart its own course. Yet it is also true that certain rights are universal, among them freedom of speech, freedom of the press, freedom of assembly, freedom of religion, and the freedom of citizens to choose their own leaders, he said.

These are not American rights, or Australian rights, or Western rights. They are human rights. They stir in every soul, as we've seen in democracy's success in Asia.

The United States has had strained relations with Myanmar since the military junta, which took power in a 1962 coup, killed thousands in a crackdown in 1988.

U.S. Secretary of State Hillary Clinton said last Friday that Myanmar appeared to be making some real changes to its political system, but the United States wanted to see more reform before embracing the country formerly known as Burma.

Clinton noted reports of substantive dialogue between the government and Suu Kyi and changes in the country's laws on labour and political party registration.

Myanmar's new government has responded by urging the United States to lift sanctions, describing its reforms as genuine, a line echoed by Indonesia's foreign minister and current ASEAN chair, Marty Natalegawa, who told Reuters they were irreversible after visiting the country last month.

Recent overtures by Myanmar's government have included calls for peace with ethnic minority groups, some tolerance of criticism, the suspension of an unpopular Chinese-funded dam project and the legalisation of labour unions. President Thein Sein has also defied sceptics by reaching out to Suu Kyi.

The resource-rich country, as big as France and Britain combined, sits between booming India and China with ports on the Indian Ocean and Andaman Sea that, if developed with proposed rail and pipeline projects, would allow cargo ships to bypass the Straits of Malacca.

That would open the way for faster delivery of oil from the Middle East and Africa to China and other countries in the region straddling the Mekong River.

India, Japan and Southeast Asia have sought to ramp up engagement, largely to counterbalance China's influence and to gain a toehold in a country whose proven gas reserves have tripled in the past decade to around 800 billion cubic metres, equivalent to more than a quarter of Australia's, BP Statistical Review figures show.

(Additional reporting by James Grubel and Caren Bohan in Canberra and Aung Hla Tun in Yangon. Editing by Jonathan Thatcher and Jason Szep)