(Adds party reactions, paragraphs 5-7)

By Nizam Ahmed

DHAKA, Sept 9 (Reuters) - Bangladesh is lifting a ban on indoor political activity to let parties prepare for parliamentary elections late next year, the army-backed interim government said on Sunday.

"The ban on indoor political activity will go from tomorrow (Monday)," Fakhruddin Ahmed, chief of the interim government said in a televised address.

The interim administration took charge in January, imposed a state of emergency and cancelled elections planned for Jan. 22 following months of political violence.

The state of emergency included a ban on political activity inside buildings, which will be lifted on Monday, as well as open air meetings.

The decision was hailed by major political parties including the Awami League and Bangladesh Nationalist Party (BNP) of detained former prime ministers Sheikh Hasina and her arch rival Begum Khaleda Zia respectively.

"By lifting the ban the government has accepted a national demand," Zillur Rahman, acting president of Awami League told Reuters.

"It's a people's victory, it is proved that people's aspirations cannot be suppressed for long," Hannan Shah, a senior leader of BNP told reporters.

Fakhruddin said an election commission would hold discussions with political parties and complete a digital electoral roll with photographic identification by October 2008.

He said he sought the cooperation of all to help hold a fair election before end-2008, or earlier if possible. He reaffirmed his administration would not stay beyond 2008.

Previous elections have been marred by charges of vote rigging and vote buying with losing parties often boycotting parliament.

"Our purpose is not only to hold a fair election, but also to establish a lasting democracy in Bangladesh, by removing the influence of black (illegally earned) money and use of muscle power," Fakhruddin, a former central bank governor, said.

He also warned against people committing political crime. "There will be no compromise with those trying to steal people's wealth through graft and deprive them of their due rights."

Fakhruddin praised the country's armed forces for "protecting law and order and giving the government full support to restore a flawless democracy."

He said the authorities would crack down on any trouble-makers who sought to disrupt Bangladesh.

Police on Sunday said they had formally charged two Dhaka University academics with instigating violent student protests in August, which posed a serious challenge to the army-backed interim government.

Authorities clamped a curfew in the capital and five other cities as clashes between students, said by the authorities to being backed by political activists, and security forces led to one death and 300 injuries.

All universities and colleges in the six cities were also shut indefinitely in efforts to end the unrest.

AlertNet news is provided by