(Adds blast, move to recover illegal weapons)

By Nizam Ahmed

DHAKA, Nov 20 (Reuters) - At least 20 people were wounded in gunbattles between rival activists as a transport blockade to force the removal of election officials paralysed Bangladesh on Monday, police and witnesses said.

The blockades have been organised by a 14-party alliance led by Sheikh Hasina, chief of the Awami League, which accuses the officials of bias and wants them out before national elections in January.

Police used batons and teargas to quell the violence in western Natore, 230 km (144 miles) from the capital Dhaka, on the first day of an indefinite blockade. The wounded, including a policeman caught in crossfire, were taken to local hospitals.

Witnesses said thousands of alliance activists squatted on highways linking Dhaka with Chittagong and other centres. Police and the elite Rapid Action Battalion watched the protesters but did not try to disperse them, witnesses said.

"We are facing a bigger law-and-order challenge today as both sides are massing their men on the streets," a police officer told Reuters, referring to the Awami League and rival Bangladesh Nationalist Party.

Police said a powerful bomb exploded near the south gate of the presidential palace, Bangabhaban, on Monday evening minutes after a motorcyclist was seen speeding away. No one was hurt or arrested.

Two people were killed and hundreds injured during a stoppage last week.

"We will be compelled to turn this peaceful blockade into a violent one and we are capable of storming the election commission office to throw away the biased officials," the alliance's Hasanul Haque Inu told reporters.

SCHOOLS, PORTS SHUT

The alliance accuses the election commissioners of being biased towards Hasina's rivals, particularly the BNP and its leader Begum Khaleda Zia.

Khaleda stepped down last month at the end of her five-year term and the country is being run by an interim administration headed by President Iajuddin Ahmed.

Iajuddin underwent open-heart surgery in July. Doctors checked his health on Monday and said he was stable despite increased work pressure and tension.

Hasina, in a statement, blamed the president for the stalemate and said the blockade would continue, with the aim of free and fair elections.

Khaleda said: "The only task of the interim government was to assist the election commission to conduct timely polls, but not to restructure the commission."

The blockades last week and on Monday shut everything from schools to ports. Many people left Dhaka ahead of the latest stoppage, fearing violence or being stranded in the city.

Police ordered an indefinite ban on carrying weapons and sticks during demonstrations in Dhaka and other cities.

The president on Monday sent three of his advisers to the election commission to try and find a way out of the impasse.

Iajuddin is expected to address the nation in a couple of days to explain how he plans to resolve the crisis.

"We see a light at the end of the tunnel and hope a solution is possible within 24 to 48 hours," Mahbubul Alam, adviser in-charge of the information ministry told a news conference after a meeting of the council of advisers with the president.

Alam said the council formed a committee headed by the president to recover illegal weapons ahead of the Janaury election to help ensure free and fair polls. (Additional reporting by Anis Ahmed)

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