(Recasts with protests called off, changes dateline)

JAIPUR, India, June 4 (Reuters) - A powerful Indian ethnic group demanding special government quotas called off its violent seven-day campaign on Monday after talks with authorities, community leaders and officials said.

Twenty-three people were killed in the western state of Rajasthan over the past week and transport services disrupted as members of the Gujjar community blocked traffic, set buses on fire and clashed with police and a rival group.

The violence had cut off parts of Rajasthan, popular with foreign tourists, and the Taj Mahal city of Agra in neighbouring Uttar Pradesh state, from New Delhi.

The breakthrough came at talks between Gujjar leaders and Rajasthan Chief Minister Vasundhara Raje, with the state government announcing the formation of a panel to study the demands of the community.

"A panel headed by a retired judge will be formed to look into the demand... and will submit its report in three months," Raje told reporters after the negotiations. "The Gujjars have decided to call off their campaign."

Gujjar leaders said they had agreed to end their demonstrations as they had "got what they wanted".

"Gujjars belong to a national community which has been gradually destroyed over the years, we want them to be lifted," said Roop Singh, spokesman for the Gujjar Arakshan Sangharsh Samiti, which has been leading the campaign.

"This meeting has saved the lives of thousands," he said.

The Gujjars, a nomadic community of farmers and shepherds, want to be declared a Scheduled Tribe (ST), which will entitle them to government jobs and college seats.

DELHI HIT

The protests began last week and were fuelled after police shot dead 14 Gujjars during a clash. The violence spilled over into a broader caste conflict with a rival community opposing the Gujjar demand, fearing its own privileges would be hit.

The Gujjar decision to end their campaign came on the day hundreds of community members tried to enforce a shutdown of the capital New Delhi, blocking highways leading to the city and clashing with police who retaliated by firing teargas.

Police said protesters had attempted to block traffic on at least four major highways into New Delhi, adding that in some areas demonstrators had thrown stones at police who responded by firing teargas shells into the crowds.

Thousands of police and paramilitary forces were deployed and barricades set up in sensitive areas and major roads leading to the capital.

Local television stations showed two buses and some trucks on fire and burning tyres strewn across roads in several areas.

Protesters also disrupted rail traffic near New Delhi in neighbouring Uttar Pradesh state. An official said two passenger trains were stopped after protesters blocked the tracks.

The Gujjars' demands are strongly opposed by the Meenas, a powerful community in Rajasthan, which has cornered a large slice of the existing tribal quota for government jobs and college places in the state.

The protests have led to violent clashes between the two groups, leading to several deaths. (Additional reporting by Nita Bhalla and Kamil Zaheer in New Delhi)

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