(adds year of peace deal to fourth paragraph)

By Opheera McDoom

DAMAZIN, Sudan, July 14 (Reuters) - Thousands of cheering Sudanese welcomed a former rebel leader as new governor of Southern Blue Nile state on Saturday, saying he would bring real peace and development some 2-1/2 years after a north-south deal.

Malik Agar left his more prestigious post as Sudan's investment minister to take up the governorship, which rotates between the dominant National Congress Party (NCP) and Agar's former southern rebel Sudan People's Liberation Movement (SPLM).

Agar's 18 month-term will be the first time the SPLM has been in power in Southern Blue Nile state since the deal.

Agar led the rebellion in the state and is from the area, whose fate is as yet unclear despite a January 2005 peace deal. Thousands of people lined the streets as he arrived on Saturday.

"Victory Victory to Agar," they shouted as he arrived in the state capital Damazin's stadium. "Transparency, accountability, development," they chanted.

Resident al-Siddig al-Had said: "Malik is one of us and will bring us what we need: democracy and development."

Agar pledged to provide just that. "My first priority will be development, improving the infrastructure," he said.

Southern Blue Nile, which runs along the border with Ethiopia, was one of three disputed areas whose fate the north-south peace deal left open to later public consultation.

Almost 2-1/2 years since the peace deal it has seen little development. Progress on this by Agar could influence its people to favour joining South Sudan rather than the North in the future.

"There are still no roads. Malik has to bring us roads first," said 16-year-old student Angelina John.

After years under government control, the crowd welcomed Agar's message police and popular defence force militias would not terrorise them as they had during the war. "The police will now be used to protect the people," he told the cheering crowd.

Sudan's north-south deal ended Africa's longest civil war which had raged for all but 11 years since independence in 1956. Two million died and more than 4 million were driven from their homes.

One of the few disputed areas where oil has not been found, Southern Blue Nile state is often sidelined.

"The SPLM is the only party which offers democracy to Sudan and the only party who can bring it," said elderly al-Had, adding he was sure the SPLM would win elections, which under the deal should be held by the end of 2009.

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