Yemeni Nobel Peace Prize winner Tawakul Karman has said President Ali Abdullah Saleh and his inner circle must be barred from power for good if the country is to have any chance of restoring stability.

In an interview after she returned to her country late on Thursday, Karman said the immunity Yemen's interim government was set to grant Saleh and his men to help ease him out of office should be accompanied by a ban on them holding official positions.

Saleh and his family may have been spared from prosecution but they have to be removed from positions of power, said Karman, who met supporters bearing flowers and hand-drawn portraits of her in the Yemeni capital.

If there is to be any chance of successful transition in Yemen these men must leave politics altogether.

Under the terms of a transition pact drawn up by Yemen's richer Gulf Arab neighbours with U.S. and U.N. backing, Saleh is to step down and a vote to pick his successor held next month. His deputy, the acting leader, is the sole candidate of note.

A central element of that deal - which aims at ending a year of protests demanding Saleh's ousting that have been punctuated by fighting between his forces and those of a rebel general and tribal chieftains - is immunity from prosecution.

Yemen's parliament is due to debate the draft law on Saturday, a move denounced by protesters who demand he face trial for the killings of their counterparts during the uprising and described by Human Rights Watch as a licence to kill.

There can be no transition in Yemen without justice. In order for things to move forward the rulers must own up and apologise for the crimes they have committed, said Karman.

Karman, a mother of three and a prominent member of Islamist

opposition party Islah was a key figure in the early days of the uprising against Saleh last January.

She returned home to scenes of jubilation on Thursday after a three-month tour of the world trying to garner international support and attention from pro-democracy enthusiasts.

MILITARISED CAPITAL OVERSHADOWS VOTE

Karman was greeted by thousands of protesters as she marched into Change Square flanked by a group of women wearing black veils, and urged her audience to escalate the protests.

A key task of the interim government - split between Saleh loyalists and opposition parties - is to oversee demilitarisation of Yemen's cities, where pro-Saleh forces including ones led by his son and nephew have fought foes.

Restructuring of the military is supposed to follow the demilitarisation but the capital remains heavily armed, despite the removal of some makeshift checkpoints and a return of some army units to their barracks.

Plain-clothes gunmen could be seen huddling on street corners on Thursday and soldiers loyal to General Ali Mohsen - a Saleh ally who turned on him as protests escalated -still control large chunks of the north of the capital where the protest encampment is located.

Gunmen loyal to tribal leader Sadeq al-Ahmar also sealed off the main ring road, causing gridlock. They said they had received orders from their leader to clear the way for his arrival.

Karman said the military standoff threatened the election, set for February 21.

As long as the armed forces remain divided and on the streets of the capital I don't think it is safe or advisable for elections to take place, she said.

Neither Vice President (Abd-Rabbu Mansour) Hadi nor anyone else will succeed in ruling and implementing real reforms if they do not preside over a unified and obedient army. If this doesn't happen the next president will be nothing but a pawn of the old regime, she said.

Our job, as the youth, is to ensure the transition succeeds in Yemen, but under our conditions, she said. We will remain in the streets, putting pressure on the political parties, until we feel that real change has been achieved.

(Editing by Joseph Logan and Alison Williams)