By Andrew Hammond

RIYADH, Feb 18 (Reuters) - Saudi Shi'ites have asked the authorities to scrap plans to settle Sunni Muslim Yemenis in southern Saudi Arabia to change the demographic balance in an area where they are the majority.

The Ismaili Shi'ites of Najran, bordering Yemen, say they had successfully petitioned King Abdullah two years ago to halt settlement of up to 10,000 Yemeni tribesmen in housing projects built for them on large tracts of land surrounding Najran city.

But a protest letter sent last month to the governor of Najran province, Prince Mishaal bin Saud, complains of marginalisation and says plans to settle another Yemeni tribe must stop.

"The king and a number of decision-makers promised the citizens of Najran that settlement would stop ... it appears that settlement is a deliberate and extensive project," it says, referring to thousands of Najranis it says have long been overlooked when seeking similar state largesse.

"We received assurances that some issues might be resolved, but others will take time," said Mohammed Al-Askar, an Ismaili activist involved in drawing up the petition.

Najran is the historic centre of the Ismailis, a Shi'ite sect which has long complained of victimisation by the prevailing school of Sunni Islam followed by the Saudi state.

Najran was the scene of violent clashes in 2000, when hundreds of Ismailis clashed with police. Ismailis say that was the spur for plans to dilute their presence with Sunnis but that the settlement policy could provoke more social unrest.

The government's Human Rights Commission has said previously it is looking into the Najran issue.

"We really do not know much about what's going on," said Turki al-Sudairy, head of the official body on Monday. "I'm not sure what information to believe. We don't have a man there."

An Interior Ministry official declined to comment.

Ismailis are thought to form a large majority in the remote region whose population was put at 420,000 in a 2004 census.

On a recent trip to the region, large billboards signed in the name of Yemeni tribal leaders had been erected to thank the local governor and senior Saudi royals for funding some of the housing projects -- prim towns with grid street designs, one storey villas, street lighting and electricity.

"It's a form of racial discrimination. We don't have services," said Said, 30, pointing to a map on the wall of a deserted office outlining plans for new housing units.

"There are families here who cannot get a new house or a legal deed to the land they live on. Even the children of the newcomers are given pieces of land." (Editing by Charles Dick)

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