Yemeni forces loyal to outgoing President Ali Abdullah Saleh and opposition gunmen are withdrawing from the streets of Taiz city, an official said on Friday, easing violence that threatened to wreck a political solution to months of upheaval.

Dozens have been killed in Taiz, Yemen's commercial capital, since Saleh signed a deal last month to give up power. Months of anti-government protests have pushed the impoverished country to the brink of civil war.

An official said a committee set up to restore normality to Taiz was clearing away road blocks set up by Saleh opponents and loyalists during street battles, and overseeing their withdrawal from occupied buildings.

The International Committee of the Red Cross said recent violence in Taiz had harmed medical and other essential services.

Tragically, some of those who have died would have lived if fighters had allowed ambulances to take them to hospital. In addition, medical facilities have been hit on several occasions, said Eric Marclay, the ICRC's head of delegation in Yemen.

More than three weeks after Saleh formally handed power to his deputy Abd-Rabbu Mansour Hadi, protesters continue to take to the streets in anger at opposition parties' endorsement of the deal, which grants immunity from prosecution to Saleh over the killing of demonstrators by security forces.

Saleh's General People's Congress (GPC) party said it would stop holding pro-government rallies after Friday prayers to show its commitment to a political solution.

The decision by the party's leadership is a new sign of the GPC's eager desire to act in the higher interest of the nation and to begin ending the political crisis, said a statement from the party that urged opposition parties to do the same.

A member of the opposition Joint Meeting Parties (JMP) said it was not for them to call off street protests.

We in the JMP do not have the authority to cancel protests and sit-ins. It's the youth movement that controls the protesters, the assistant secretary-general of the socialist party told Reuters.

Under the transfer plan negotiated by Yemen's wealthy Gulf neighbours, the GPC and opposition parties divided up cabinet posts between them and formed a national unity government to steer the country towards a presidential election in February.

The cabinet, which is due to be sworn in on Saturday, faces a host of challenges including a southern separatist movement, a rebellion in the north and a regional wing of al Qaeda that has exploited the upheaval to strengthen its foothold in Yemen.

Neighbouring Saudi Arabia and the United States, both targets of foiled attacks by al Qaeda's Yemen-based wing, fear the global militant network could use a security vacuum to plot and perhaps carry out attacks on the region and beyond.

The United Nations envoy who helped broker the power transfer deal visited Yemen's south, where he met the leader of the separatist Southern Movement Hasan Baoum, who was released on Thursday in what secessionists saw as a gesture of goodwill.

North and south Yemen formally united in 1990 but some in the south, home to many of the country's oil facilities, openly question the union and say northerners have since usurped resources and discriminated against them.

U.N. envoy Jamal Benomar is also due to visit the north of the country, where fighting has flared in recent weeks between Shi'ite Muslim rebels known as Houthis and Sunni Salafis.

Separately, opposition leader Mohammed Basindwa, who is now prime minister, said his first foreign visit would be to oil-rich Saudi Arabia and the United Arab Emirates to ask for urgent support for Yemen's fuel and electricity needs.

(Additional reporting by Mohammed Mukhashaf in Aden; Writing by Isabel Coles; Editing by Peter Graff)