Ultra-conservative Salafists in Yemen have formed their first political party, urging recently elected President Abd-Rabbu Mansour Hadi to apply Islamic law to all areas of life and to reject interference by foreign powers.

Salafis, ultra-orthodox even among fundamentalist Muslims, have traditionally shunned politics. But the success of the Salafi al-Nour party in Egypt, which won the second highest number of seats in the first democratically-elected parliament in decades, may have changed that.

Salafists in Yemen said their new party would be called the Rashad Union.

After months of studying and discussing the necessity of immersion in the political process, we have decided to found the Rashad Union, they said in a statement, describing participation as a religious duty.

They also called for talks with Sunni Islamist militants and northern Shi'ite rebels to end political upheaval that has pushed Yemen to the brink of civil war.

It is necessary to open dialogue with the armed groups like Ansar al-Sharia and the Houthis to get Yemen out of the cycle of violence, said Abdel Wahhab al-Hamqani, one of the leaders of the Salafi movement.

Both Shi'ite Muslim rebels, known as Houthis, and militant Sunni Islamist group Ansar al-Sharia (Partisans of Islamic Law) have exploited weakened central government control to grab chunks of the country over the past year.

COMPLEX PATCHWORK OF MILITANTS

The fate of Yemen's interim government depends, at least in part, on how it deals with these two groups.

Although parliamentary elections are not due to be held until 2014, the Rashad Union will be able to take part in a national dialogue.

The dialogue was agreed as part of a Gulf-brokered deal that allowed former president Ali Abdullah Saleh to leave office after a year of protests against his rule.

The Salafi suggestion of negotiating with the Houthis is unusual because they adhere to a hardline creed that views Shi'ites as heretics. Houthis and Salafis have been fighting each other on and off in the north of the country for months.

The Houthis, who have effectively carved out a state-within-a-state for themselves along Yemen's border with Saudi Arabia, have been invited to take part in the national dialogue. But the government has said it will not engage with Ansar al-Sharia, which is inspired by al Qaeda.

Al Qaeda itself is inspired by a puritanical strain of Islam akin to that of the Salafis.

In statements posted on Islamist forums by Ansar al-Sharia earlier this week, the militant group said its exclusion from the dialogue and the Houthis' inclusion was inconsistent.

The Rashad Union will vie with better established players on the Yemeni political scene, such as the opposition Islamist Islah party and the General People's Congress (GPC), which is headed by Saleh himself.

(Writing by Isabel Coles; Editing by Andrew Osborn)