(Adds quotes from British envoy)

DHAKA, April 24 (Reuters) - Bangladesh's former prime minister Begum Khaleda Zia was recovering from illness on Tuesday at her home, her associates said, adding pressure on her from the interim administration to leave the country had eased.

The associates on Monday said Khaleda had pulled out of a reported deal with the army-backed interim government to go into political exile with most of her family members as part of a campaign to cleanse politics.

"Begum Zia is improving but still has some problem with low blood pressure and arthritis pain in her knees," a close associate quoted her personal physician, Dr. Mahtab Uddin, as saying.

She should have a complete rest for few more days, Mahtab Uddin, a retired brigadier-general of Bangladesh Army Medical Corps, told Khaleda associates.

Witnesses said security forces had been reduced around Khaleda's home in Dhaka - where she has been under virtual confinement for more than two weeks - but no outsiders were seen to enter her compound.

"Government pressure to send Khaleda Zia abroad has subsided considerably," Hannan Shah, a senior leader of BNP, told a local television channel on Tuesday.

Khaleda's eldest son and political heir apparent, Tareque Rahman, who is also senior joint secretary-general of her Bangladesh Nationalist Party (BNP) has been detained on extortion charges.

Security forces have also arrested more than 160 other key political figures since the interim government imposed a state of emergency on Jan. 11, as part of the crackdown on corruption.

Khaleda's main political rival, former prime minister Sheikh Hasina, is now trying to persuade the government to withdraw a ban on her returning from a holiday abroad.

An election planned for Jan. 22 was postponed after weeks of political violence and no new date has been announced.

"We hope that Bangladesh will lift emergency soon," Britain's envoy to Dhaka, Anwar Choudhury, told reporters after talks with election commission officials on preparations for the election.

The election commission was considering partially lifting a ban on political activity by allowing parties to hold indoor rallies, an official earlier told reporters.

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