At least five civilians and three soldiers were killed in the protest hotbed city of Taiz on Friday, and the head of a new government meant to prevent civil war in Yemen said a week-old political pact might unravel if the bloodshed went on.

A deal to ease President Ali Abdullah Saleh from power has yet to defuse 10 months of violent unrest over the autocratic leader's fate and the political future of impoverished country.

Yemen's Gulf Arab neighbours and their U.S. ally hope the deal can reverse a drift toward chaos on the doorstep of the world's top oil exporter, Saudi Arabia, and stop al Qaeda's Yemeni branch gaining a foothold near Red Sea shipping routes.

In Taiz in south Yemen, government forces shot dead three civilians, and a fresh battle between government troops and gunmen backing protesters killed two people trapped in their homes during fighting, protest leaders and medical workers said.

Three government troops were killed in what a security source called an attack by fighters tied to the opposition and the Islamist Islah party, which has backed the protests.

Witnesses said street battles with heavy weapons including tanks raged near a police headquarters in the centre of Taiz, and activist Tawfiq al-Shaabi said dozens of families had fled artillery and small arms fire in western areas of the city.

At least 12 civilians, government soldiers and anti-Saleh gunmen were killed in Taiz in the previous few days.

As the violence continued, Abd-Rabbu Mansour Hadi, the vice president to whom Saleh has transferred his powers, called on the provincial governor in Taiz and opposition parties to agree a truce, state news agency Saba said.

The earlier casualties in the city 200 km (120 miles) south of the capital Sanaa included five civilians killed by pro-Saleh troops during intense shelling of some Taiz neighbourhoods, according to residents and medical workers.

Protesters in Taiz are ringed by troops loyal to Saleh as well as tribal forces and troops opposed to him. Taiz's governor called for a ceasefire late on Thursday.

Mohammed Basindwa, a former foreign minister designated by opposition parties to lead a government to be divided between them and Saleh's party, said his side would rethink its commitment to that pact if the killing in Taiz did not cease.

In a statement, Basindwa said the killing in Taiz was an intentional act to wreck the agreement that opposition parties signed along with Saleh, who had backed out of signing the deal brokered by Yemen's Gulf neighbours three times.

An official of the Joint Meeting Parties (JMP), a bloc of opposition parties that signed the deal, said on Thursday they had agreed a cabinet line-up with Saleh's party and the bloc's spokesman said this could be announced as early as Saturday.

The official, speaking on condition of anonymity, said Saleh's party would take portfolios including defence, foreign affairs and oil, while the opposition would get the interior, finance and education ministries.

A completed transfer of power would make Saleh the fourth Arab ruler to be toppled by mass public protests that have reshaped the political landscape of the Middle East this year.

RIGHTS GROUP CALLS FOR FREEZE OF ASSETS

The prospective government is supposed to shepherd Yemen towards a presidential election that Vice President Hadi has set for February 21, 2012.

In a statement, the JMP accused pro-Saleh forces of crimes against humanity, and warned this may jeopardise pledges of immunity from prosecution to Saleh and his circle, denounced by protesters, that underpin the transition deal.

All this will only escalate the spirit of rejection withing society against giving any guarantees or any immunity to Saleh and his helpers, it said, demanding Hadi authorise a military council tasked with running the armed forces until an election.

Opposition sources said on Thursday they had given Hadi a list of their choices for the council including former defence and interior ministers as well as army commanders who turned against Saleh.

Under the Gulf initiative signed by Saleh, the body will restructure the armed forces. His son Ahmed commands the Republican Guard, one of the best equipped units.

Human Rights Watch said last week that up to 35 civilians had been killed in Taiz since a U.N. Security Council resolution in October that endorsed the call for a power transfer and condemned the crackdown on protesters.

The group said most of those civilians were killed by artillery fire from Yemeni government forces, and called on the U.N. Security Council to freeze the assets of top Yemeni officials and distance itself from any promises of immunity.

Any Saleh successor will face multiple overlapping conflicts that have gained force during the political crisis, including rising separatist sentiment in the south, which fought a civil war with Saleh's north in 1994, and fighting with Islamists who have seized territory in the southern province of Abyan.

An official in Abyan said the head of a volunteer force fighting Islamists was wounded and another person killed when unidentified attackers hurled a bomb at him as he was going to Friday morning prayers in the city of Lawdar.

(Additional reporting by Mohammed Mukhashaf; Writing by Joseph Logan; Editing by Louise Ireland)