By Tim Cocks

LABWOROMOR, Uganda, May 15 (Reuters) - The security situation in northern Uganda has improved beyond recognition since peace talks to end 20 years of civil war began last July, the new U.N. aid chief said on Tuesday.

John Holmes is on his first visit to the region ravaged by an insurgency that has killed tens of thousands and driven some 1.7 million more into squalid camps.

"The security situation has clearly improved out of all recognition," Holmes said in front of mud huts in a resettlement site for the uprooted villagers in Labworomor.

"People are thinking about beginning going home. We have an opportunity to try and make this a success story."

On-off peace talks between the government and Lord's Resistance Army (LRA) rebels produced a truce last August that has largely held, giving many of the uprooted in the north confidence to move closer to their homes.

Holmes' predecessor Jan Egeland took an active part in the peace process, regularly calling rebel commanders and last November making a trip to visit LRA leader Joseph Kony on the border between Sudan and Democratic Republic of Congo.

"I don't think I need to get involved in the same way that my predecessor did," Holmes said, adding that the U.N. envoy for the talks, former Mozambique President Joaquim Chissano, was seeing success alongside mediators from other nations.

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