By Ranga Sirilal

COLOMBO, Aug 8 (Reuters) - A breakaway faction of Sri Lanka's Tamil Tigers seen allied to the state said on Wednesday it would dissolve its military wing once its security was ensured, the first such offer since it was set up three years ago.

Aid workers say members of the Karuna group, which split from the mainstream Tigers in 2004 and who analysts say are helping the military to fight the Tigers, are roaming armed in the eastern district of Batticaloa, unimpeded by the state.

The group, accused of rights abuses such as abductions and forced recruitment, had earlier refused to lay down arms until their Tamil Tiger foes do so.

"We are compelled to have a military unit for our self- defense. Once our security is ensured we are ready to dissolve that unit," the Karuna group, otherwise known as Tamileela Makkal Viduthalai Pulikal, said in a statement.

The group, which is seen as a threat to stability in eastern Sri Lanka, wants to contest local and provincial government elections planned by the year-end. It is not yet formally recognised as a political party.

The latest offer comes two days after the U.S.-based Human Rights Watch said the Karuna group continued to abduct and forcibly recruit children and young men into its force with either the complicity or knowledge of the Sri Lankan government.

The group dismissed the report's findings as baseless.

Analysts doubt the Karuna group will disarm unless the Tigers are defeated and no longer pose a threat to them, which seems a distant prospect amid a new chapter in a two decade civil war that some fear will grind on for years.

"They are at special risk as they are an anti-Tamil Tiger group, but that does not justify them carrying weapons and the government must provide the required security," said Jehan Perera of non-partisan advisory group the National Peace Council. "Until such time, they will not disarm."

The government says there are no armed groups operating in the areas it controls, besides the Tamil Tigers trying to flee. It also denies any links with the Karuna group.

The military has evicted the Tigers from vast swathes of territory they controlled in the east in recent months amid renewed war that has killed around 4,500 people since last year alone and nearly 70,000 since 1983.

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