The government "will be formed within the next couple of days, and if they do it today it is even better," Michele Cervone d'Urso, the EU's first ambassador to Yemen, said.

Yemen's outgoing deputy information minister, Abdo Al-Janadi, said: "According to my information, the government should be announced today."

Half of the government must be opposition members while regime loyalists make up the other half, based on a Gulf-brokered and UN-backed power transfer plan which President Ali Abdullah Saleh signed on Nov. 23.

Cervone said that a military commission, which under the agreement is to oversee a restructuring of the security services and the withdrawal of gunmen from the streets, would also be formed "with the next couple of days."

Under the agreement, the military committee, headed by Vice President Abd-Rabbu Mansour Hadi, would have equal numbers from Saleh's General People's Congress (GPC) and the opposition Joint Meeting Parties (JMP).

A GPC official said on Saturday Saleh's party was not happy about opposition nominees to the committee. The state news agency later quoted Hadi's office as saying any agreement on the military body depended on forming a government.

At least two people were killed Sunday in battles between loyalists of Saleh and foes in Taiz, the center of 10 months of protests that have driven the Arab world's poorest country to the brink of civil war. Sunday's deaths bring to at least 19 the toll from four days of fighting in Taiz.

A military officer meanwhile said five government soldiers were killed in an attack by Al-Qaeda suspects on their post near the southern restive city of Zinjibar in Abyan province.