Diplomatic efforts to ease Yemen's President Ali Abdullah Saleh from power and end months of protests have made some headway, an opposition official said on Sunday, with differences narrowed down to who controls the army during a transitional period.

Progress towards a deal came a day after hundreds of troops from the Republican Guards, an elite force led by Saleh's son Ahmed, defected to join protesters camping out in central Sanaa since February to demand an end to the leader's 33-year rule.

An opposition leader said talks with government representatives, mediated by U.N. envoy Jamal Benomar, moved closer to an agreement on a Gulf Arab plan to remove Saleh from power. It would transfer power to his deputy, Abd-Rabbu Mansour Hadi, before an early presidential election.

There is progress in the negotiations, the leader in an opposition coalition told Reuters. He declined to be identified.

The differences now focus on the president's military authorities. The opposition wants these powers to be transferred to a committee that will be responsible for the armed forces until a new president is elected.

Saleh would retain his title during the interim period but Hadi would take over his powers, the opposition figure said. Yemen's opposition say Saleh wants overall control of the army, while they want the power to sack commanders who disobey orders.

The army is a key source of power in a society with few other national institutions.

Saleh, who has three times backed away from signing the accord, told elite Republican Guard soldiers he visited on Saturday that he was considering stepping down.

We in the presidency of the state are willing to sacrifice for the nation, but you will stay, you are present ... you are the authority of power, according to state news agency Saba.

AGREEMENT NEAR

Deputy Information Minister Abdu al-Janadi also said on Sunday that an agreement was near, and that it could be signed in the Saudi capital Riyadh as early as on Tuesday, Saba said.

Saleh's ruling General People's Congress party said on Saturday an agreement could be finalised within two days and signed in Riyadh. An opposition official subsequently dismissed prospects of an imminent deal.

Benomar, who arrived in Yemen last week to follow up on a U.N. Security Council resolution calling on Saleh to sign the Gulf initiative, has delayed plans to leave before a November 21 deadline to report to the U.N. secretary general.

An opposition delegation visited Kuwait on Sunday to gather support for a prompt implementation of the power transfer plan.

We asked them (the Kuwaitis) to say to Ali Abdullah Saleh that the time has come to sign the initiative or else to withdraw it, delegation spokesman Ali al-Mamari said.

Hundreds of Republican Guards have defected, saying they refuse to use force against protesters, activists said.

We joined the revolution because we do not want to participate in the bloodshed and killings practiced by Saleh and his forces in (the southern city of) Taiz, Sanaa and in Arhab (north of Sanaa), a force member told protesters on Saturday.

In continuing unrest, a colonel in the army was shot dead in Arhab, Saba reported, blaming the opposition for the attack.

In the southern port city of Mukalla, another army colonel was shot dead by gunmen on a motorcycle, a local official said.

It was the latest in a series of drive-by attacks on security or military officers in southern Yemen, which officials blame on militants believed to be linked to al Qaeda.

Militants have seized swathes of territory in southern Yemen in the chaos created by 10 months of unrest and protests.

In Arhab, an opposition website reported that a child was killed on Sunday during shelling by government forces on the tribal area north of the Yemeni capital.

The economy of the impoverished Arabian Peninsula state has come to a nearly complete halt. On Saturday, the Aden oil refinery stopped production after crude supplies ran out due to an attack on a supply pipeline.

(Reporting by Mohammed Ghobari in Sanaa, Mohammed Mukhashaf in Aden and Isabel Coles in Kuwait.; Writing by Sami Aboudi and Firouz Sedarat; Editing by Joseph Logan and Elizabeth Piper)