SUPPORTERS OF the Burmese opposition reacted warily yesterday to news that the United Nations is considering offering the ruling military regime up to $1bn (pounds 602m) in financial and humanitarian aid, in return for progress towards democracy.

The United Nations envoy, Alvaro de Soto, was in Rangoon last month to discuss the deal. Officials close to the project said that the reported $1bn figure of proposed aid and investment was untrue. But the United Nations and World Bank have been actively involved in trying to provide a suitable carrot-and-stick package that might unlock the stalemate between the opposition and the regime.

The Foreign Office minister Derek Fatchett is understood to have sought further assurances from Mr de Soto in recent days that money would not be disbursed without guarantees.

Certainly, the main worry of supporters of the Burmese opposition is that the regime could, in effect, take the money and run. Officials emphasise that the Burmese government is a long way from saying yes. Much though they would like the money, the military regime is not keen on negotiating with Aung San Suu Kyi's party, the New League for Democracy, which won more than 80 per cent of the seats in elections in 1990.

Equally, if they do decide to accept the offer, that could itself be problematic. John Jackson, a director of the Burma Action Group, said: "If they accept, I would be extremely sceptical." He argued that mere negotiations with the opposition should not be enough to loosen international purse strings. "They could negotiate for years and it wouldn't achieve anything."

The stalemate between the regime and the opposition has focused minds on both sides.The NLD has made little progress in pressing for change. Meanwhile, the combination of the Asian crisis and the generals' dismal management of the economy means that some at least in the regime are worried that they, too, are in a political cul-de-sac. Splits in the regime have been widely rumoured.

Publicly, Britain has taken a lead in pressing for tougher action against Burma. It also hosted a meeting, attended by officials from a clutch of Western and Asian countries, at which the de Soto initiative was discussed.

Britain's own position is ambiguous. It was revealed last week that the new Burmese foreign minister was being allowed into Britain, in contravention of an EU visa ban. U Win Aung, the ambassador to London since 1995, is "foreign minister designate" and he is about to leave for Burma permanently.

Nepal and Bhutan are to resume talks involving the repatriation of nearly 100,000 Bhutanese refugees living inNepal for the past eight years.

Relations between the two Himalayan kingdoms have been strained since Nepalese-speaking Bhutanese started fleeing to Nepal in the early Eighties after Bhutan tightened citizenship regulations.