(Adds rebel leader statement, paragraphs 5-7)

SANAA, May 12 (Reuters) - Yemen said on Saturday it was recalling its ambassadors to Iran and Libya over what it sees as their support for Shi'ite Muslim rebels involved in bloody clashes with government forces.

Yemeni officials have accused Iran and Libya of backing rebels led by Abdul-Malik al-Houthi in the northern province of Saada. The two countries have denied the allegation.

"The government will consult with the two ambassadors on the developments in Saada," Yemeni Foreign Minister Abubakr al-Qirbi told Reuters.

The rebel deny receiving Iranian or Libyan support.

Meanwhile, a rebel leader welcomed remarks by Qirbi in an interview with Reuters on Tuesday that the government would consider talks with the rebels if they lay down their guns.

"This call is in the right direction, and there is no reason to launch this huge war against us," Yahya al-Houthi, an exiled brother of the rebel leader, said in a statement issued in Germany and faxed to reporters in Yemen.

"We and our supporters are ready to obey the state provided that the state ... carries out its responsibilities towards the citizens."

Hundreds of people have been killed and thousands have fled their homes due to the heavy clashes between the rebels, from the Zaydi branch of Shi'ite Islam, and government forces.

The government of Sunni-dominated Yemen accuses the rebels of seeking to oust its secular administration and install Islamist rule. The rebels say they are defending their villages against what they call government aggression.

Yemeni President Ali Abdullah Saleh ordered the army in January to crack down on Houthi and his group, whom the government says preaches violence against the United States.

The conflict has raged on and off since 2004. The flare-up began when the rebels attacked government forces who set up a checkpoint deeper inside Saada.

Yemen, the ancestral homeland of al Qaeda leader Osama bin Laden, joined the U.S.-led war on terrorism after the Sept. 11 attacks on U.S. cities. Houthi's backers are not linked to al Qaeda.

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