JAKARTA, May 12 (Reuters) - Thousands of Indonesians took to the streets on Monday to protest against a government plan to raise fuel prices as they marked 10 years after the riots that led to the downfall of former President Suharto.

About 1,000 students rallied outside the tightly guarded presidential palace in the capital, Jakarta, demanding President Susilo Bambang Yudhoyono and his deputy Jusuf Kalla resign for what they called the government's failure to rein in food prices.

"SBY-JK are enemies of the people," the protesters chanted, referring to Yudhoyono and Kalla by their initials.

The protesters set fire to pictures of Yudhoyono and Kalla, prompting police to use fire extinguishers to douse the flames. Kalla was quoted by the local media as saying on Saturday the government would raise fuel prices at the end of this month.

He said the increase would be lower than 30 percent and the government was preparing a scheme to cushion its impact on the poor.

The Indonesian government faces tough decisions over how to contain inflation and curb an expanding budget deficit as its subsidy bill balloons because of rising global oil prices.

Price hikes are a sensitive subject in the country, which has among the lowest fuel prices in Asia. Many in Indonesia live on less than $2 a day and are already grappling with the impact of higher food prices.

Yudhoyono's predecessor, Megawati Sukarnoputri, was forced to roll back a decision to lift fuel prices after massive demonstrations. A big fuel price increase also led to the rioting that helped topple Suharto in 1998.

In Java island's southern coast town of Cirebon, hundreds of students blocked the main street during a protest against the planned price hike, state Antara news agency reported.

A similar protest was also held in Makassar, the capital of South Sulawesi province, where police and students clashed last week during a demonstration against the plan to raise fuel cost.

In a separate protest in Jakarta, about 2,000 people picketed the attorney general's office building to demand justice for student protesters killed during anti-Suharto protests in 1998.

The shooting dead of four university students triggered rioting in Jakarta that left about 1,000 dead, mostly people trapped in shopping malls set ablaze by rampaging mobs.

Indonesia is Asia's top diesel and gasoline importer and the Asia-Pacific's only member of the Organization of Petroleum Exporting Countries. (Reporting by Telly Nathalia; Writing by Ahmad Pathoni; Editing by Sugita Katyal and Valerie Lee)

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