The announcement came as forces opposing and loyal to President Ali Abdullah Saleh pulled back from some positions in the southern city of Taiz, after a bout of fighting there killed at least 20 people. The violence has threatened to derail the formation of the government, a key element a Gulf-brokered deal to end Saleh’s 33-year rule.

Mohammed Basindwa, a former foreign minister representing opposition parties who are to split Cabinet posts with Saleh’s party, told Reuters he expected the government to be agreed on Wednesday night or the following day.

Basindwa last week said the opposition’s commitment to the power transfer depended on ending the bloodshed in Taiz, a hotbed of protests against Saleh.

On Tuesday the belligerents withdrew from some positions they held in the city, some 200 km  south of the capital Sanaa, leaving residents to survey the devastation.

A committee tasked with implementing a cease-fire between the two sides moved through streets littered with buses wrecked by artillery shells, heaps of burning rubbish and shops with windows blown out by gunfire and shelling.

The fighting came as the coalition of opposition parties that signed the power transfer deal with Saleh last month said they had agreed on their candidates for an interim government.

The government is to see Yemen through to presidential elections which Abd-Rabbu Mansour Hadi, the vice president to whom Saleh has transferred his powers, has set for Feb. 21.

Any post-Saleh government would face multiple challenges including resurgent separatist sentiment in the south, with which Saleh’s north fought a civil war in 1994 following their unification under his rule four years earlier.

The region is the site of conflict between government forces and Islamist fighters who have seized chunks of an entire province, displacing as many as 100,000 people.

The United Nations voiced concern on Tuesday about the deteriorating situation in Yemen despite the signing of the GCC deal nearly two weeks ago and called on all factions in Yemen on Tuesday to cease attacks on civilians.