LEMDEN, Mauritania, Nov 15 (Reuters) - Mauritania's ousted president said he would join the fight to restore democracy in the Saharan state, despite a claim from the military junta which toppled him that he would retire.

Sidi Mohamed Ould Cheikh Abdallahi was transferred from house arrest in Nouakchott to his home town on Thursday, after which a minister in the military government said Abdallahi had vowed to retire from politics.

Abdallahi, who had been under house arrest since military officers led by Mohamed Ould Abdel Aziz overthrew him in a bloodless coup on Aug. 6, is free to receive visitors but not to leave Lemden, a town of around 500 people, 200 km (125 miles) south of the capital.

"I am constitutionally the president, democratically elected for five years," he told journalists late on Friday. "I will act. I want to work with people in the country just as much as with foreign partners who support democracy."

As well a large media contingent, politicians who have formed an anti-coup coalition travelled to Lemden to meet Abdallahi, the country's first democratically elected leader.

"We should be meeting next week to discuss the strategy to adopt," he said, without giving details of his plans.

Diplomats have said the junta's transfer of the president to Lemden from Nouakchott fell far short of international demands to restore democratic government.

The European Union threatened on Oct. 20 to apply sanctions to the Islamic state if constitutional rule under Abdallahi were not restored within a month.

Abdallahi said his months of house arrest passed without discomfort.

"I was able to read books and listen to the news. I was not badly treated," he said.

The United States has imposed travel restrictions on some members of the military government and frozen some of its aid to Mauritania, the world's seventh biggest exporter of iron ore which also started producing oil in 2006. The World Bank and former colonial ruler France have also halted some aid.

The African Union has suspended Mauritania's membership over the coup, but several AU members in the region appear to have given tacit approval to the military takeover.

Aziz accused Abdallahi of bringing government to a standstill, and of not doing enough to meet economic and security challenges such as high food and fuel prices and attacks by al Qaeda militants. (Reporting by Vincent Fertey; Writing by Daniel Magnowski; Editing by Giles Elgood)

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