Regional leaders mediating a peace deal between Burundi President Pierre Buyoya and ethnic Hutu rebels have extended by two weeks a deadline for agreement on a ceasefire.

The talks nearly came to breaking point when the two sides failed to reach an agreement by 7 November but South African Deputy President Jacob Zuma, who is chairing the negotiations, said he was more optimistic this time because real issues were being identified and discussed.

We are threatening to attack the capital because we have to defend ourselves

Daniel Gelase, FDD spokesman

He said progress would be made before the next regional summit to be held in two weeks time.

However, the Forces for the Defence of Democracy (FDD) rebel group has warned that it will pull out of the negotiations if, as it claims, the army continues its offensive against them.

Some 200,000 people, mostly civilians, have been killed in Burundi's nine-year civil war.

'Bluffing'

A power-sharing arrangement between ethnic Hutus and Tutsis was inaugurated a year ago, but two Hutu rebel groups have continued to fight.

A rebel spokesman said on Tuesday that they would attack the capital Bujumbura in retaliation for government attacks.

"We are threatening to attack the capital because we have to defend ourselves," Daniel Gelase told the BBC's French service.

Hundreds of thousands of Burundians are destitute

"Since the FDD offered a unilateral suspension of hostilities, the Burundian army spokesman said that we were bluffing and that the army would launch a general offensive."

"This offensive is now real, and this is why we have to retaliate, and very soon, we shall attack Bujumbura, because that is where they are coming from," he said.

But correspondents say that the FDD is unlikely to be able to launch an attack on the capital, as another rebel group, the National Liberation Forces (FNL), is deployed around Bujumbura.

'Appropriate action'

Speaking after a meeting with Ugandan President Yoweri Museveni on Burundi, Mr Zuma once again threatened "appropriate action" if rebels do not sign a peace deal.

This may mean sanctions against those groups seen as responsible for the deadlock.

The FDD had earlier refused to sign a draft ceasefire until its political demands were met.

Ethnic Tutsis, who make up 15% of the population, have traditionally dominated Burundi and this has continued since independence, angering the Hutu majority.

Under the power-sharing deal, Tutsi President Pierre Buyoya is due to swap places with his Hutu Vice-President Domitien Ndayizeye on 1 May 2003.

But the rebel groups still fighting say that while Tutsis dominate the army, a Hutu president would be mere window dressing.

A key stumbling block is the issue of disarmament.

The government delegate had previously rejected a plan for simultaneous disarmament of the army and the militias, saying that disarming the army would be "disastrous."

Last week some 45,000 people fled their homes in Gitega province adding to the 10,000 who were reportedly displaced by the fighting two weeks ago.