DHAKA, Dec 17 (Reuters) - Bangladesh ended a nearly two-year-old state of emergency ahead of a parliamentary election this month aimed at restoring democracy in the South Asian country, a Home Ministry statement said.

The lifting of the emergency will allow political parties to campaign freely for the Dec. 29 election. Public meetings were banned after the emergency was imposed in January 2007 after months of political violence.

President Iajuddin Ahmed signed the order to withdraw the emergency, the Home Ministry statement said.

Bangladesh's two big political parties, the Awami League led by Sheikh Hasina and Bangladesh Nationalist Party headed by Begum Khaleda Zia, had threatened to boycott the election if the emergency remained in force.

Although the government eased restrictions on political gatherings gradually and pulled troops back to barracks over the past few months, it refused to withdraw emergency fully until close to the vote to prevent violence.

The government said it will deploy the army across the country from Thursday in the run-up to the election.

Bangladesh suffered a wave of attacks in 2005, blamed on hardline Islamist groups trying to force sharia law in the secular nation. Security officials said the Islamist organisations were trying to regroup ahead of the election.

(Reporting by Anis Ahmed; Editing by Sanjeev Miglani)

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