* President Saleh says to crush northern rebellion * Saleh denies marginalisation arguments * Former southern leader vows "independence" (Adds quote in paragraph 5)

SANAA, Oct 14 (Reuters) - Separatists in south Yemen used the anniversary of an uprising against colonial power Britain to press their claim for independence on Wednesday, while President Ali Abdullah Saleh promised to crush rebels in the north.

Veteran ruler Saleh is facing two challenges to his rule from Zaidi Shi'ite Muslims in the north who have been in rebellion against central authority since 2004 and southerners of the former South Yemen.

Both complain of political and economic marginalisation by the Saudi- and Western-backed government and the Zaidis also say they are persecuted by Sunni Muslim radicals who have gained in influence via Saleh's close ties to Sunni power Saudi Arabia.

"We promise you that victory is coming soon," Saleh told a rally in Sanaa also marking the uprising in 1963 against Britain in the southern port city of Aden.

"They are the forces of backwardness because they have forgotten the past when there were no schools, hospitals or electricity," he said, describing unity of north and south Yemen in 1990 as the southern revolution's greatest gain.

The conflict in the north has intensified since the army unleashed Operation Scorched Earth on Aug. 11. Aid groups, who have been given limited access to the northern provinces, say up to 150,000 people have fled their homes.

Thousands in the opposition Southern Movement held a rally in the town of Radfan, witnesses said. The opposition website Aden Press said the exiled former president of South Yemen, Ali Salem al-Beidh, addressed the rally by telephone from Germany.

"We will not retreat from the aim of realising our second independence, whatever the sacrifices are and however long it takes," Beidh said in the speech, emailed to Reuters.

"The British occupation came from overseas, while the current one was the result of a coup by the Sanaa regime," he added, referring to a brief civil war in 1994.

The United States and Saudi Arabia, the world's biggest oil exporter, fear the instability could allow al Qaeda a new base for operations. Saudi Arabia says a number of wanted militants have fled there.

(Reporting by Mohamed Sudam and Mohammed Mukhashef; Writing by Andrew Hammond)

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