(Adds court order on rally, Tsvangirai return)

By Nelson Banya

HARARE, May 16 (Reuters) - Zimbabwe said on Friday it would hold a delayed presidential election run-off on June 27, when the opposition hopes to oust veteran leader Robert Mugabe after nearly three decades in power.

Movement for Democratic Change leader Morgan Tsvangirai will return to Zimbabwe on Saturday to start his run-off campaign after a court overturned a police ban on the opposition's first rally since it claimed victory in the country's disputed March 29 elections, party officials said.

The long-awaited second round is being held because official results showed Tsvangirai beat Mugabe in the first round, but not by enough votes to avoid a run-off.

Mugabe told a ruling ZANU-PF party conference on Friday the result had been "disastrous", and vowed he would not lose power to an opposition he said was backed by "a hostile axis of powerful foreign governments" and Western imperialists.

Zimbabweans are hoping the poll will help end political and economic turmoil and put their country on the road to recovery. But analysts said there was no quick fix after years of decay and the widespread violence that followed the March vote.

"A poll shall be taken on Friday the 27th June, 2008, for the purpose of electing a person to the office of president," a notice in a government gazette said.

Former guerrilla leader Mugabe, 84, had already said he would participate in the run-off.

Tsvangirai, who has been abroad since shortly after the March election to garner support, said on Friday he would take part as well.

"We will participate in the run-off but ... violence has to cease for an election to be conducted or that election will not be legitimate," he told reporters at a conference in Belfast.

The opposition scored a small victory on Friday when a court ordered police not to interfere with a MDC rally, due to take place in Zimbabwe's second city of Bulawayo on Sunday. Police banned the rally on Thursday.

DICTATOR

Tsvangirai said Zimbabwe's problems stemmed from Mugabe's long rule.

"There is now a general understanding that the crisis in Zimbabwe is not a problem about land it is the problem of a dictator who refuses to give up power."

Noel Kututwa, chairman of independent election observer group the Zimbabwe Election Support Network, said, "To hold an election under these circumstances ... I think the legitimacy of that election will be called into question."

The regional SADC grouping which is due to monitor the run-off said this week conditions were neither safe nor fair yet for a fresh vote. The MDC on Thursday called for an urgent SADC meeting to avoid "rivers of dead people".

Regional states fear the crisis in Zimbabwe could hurt them too. Zimbabwe's meltdown has brought 165,000 percent inflation, 80 percent unemployment, chronic food and fuel shortages and sent a flood of refugees to neighbouring countries.

Tsvangirai appears to be in a strong position to win a fair vote. But the opposition, human rights groups and Western countries accuse Mugabe of launching a campaign of violence and intimidation to try to secure victory.

ZANU-PF denies responsibility, accusing the MDC of unleashing the violence to discredit Mugabe.

"Our fist is against white imperialism. It is a fist for the people of Zimbabwe, never a fist against them," Mugabe said.

Analysts say that if Mugabe stays in power, Zimbabwe's economic crisis is likely to worsen and there are few prospects of serious political change.

The end of his rule would probably bring badly needed international aid and hopes of economic revival.

But Steven Friedman, research associate at the Institute for Democracy in South Africa, said removing Mugabe was no panacea for the country's ills.

"It's a grave mistake to believe that the problem in Zimbabwe is simply Robert Mugabe. It's a whole collection of power holders who control the military, the police and may well control large sections of the civil service," he said. (Additional reporting by Cris Chinaka, Anne Cadwallader in Belfast and Caroline Drees in Johannesburg; Editing by Giles Elgood)

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