Tue Oct 9, 7:43 PM ET

YANGON - Myanmar's opposition on Tuesday cautiously welcomed moves by the junta towards dialogue with its leader Aung San Suu Kyi but insisted that any offer should come with no strings attached.

With the United Nations weighing up a statement criticising the government, junta chief Senior General Than Shwe named deputy labour minister Aung Kyi to build "smooth relations" with the detained opposition leader.

The appointment of Aung Kyi, a general with a reputation as a moderate, who has a track record of dealing with the United Nations, is the latest in a series of small gestures apparently aimed at appeasing UN member states.

The junta last week said that Than Shwe was willing to meet Aung San Suu Kyi, who has been under house arrest for most of the past 18 years, albeit with strict conditions attached, including that she drop support for sanctions.

"Finding a solution through dialogue is the natural way to help the people and the country," the National League for Democracy (NLD) said in a statement.

"A willingness to hold dialogue is the main way to solve the problems now facing the country," it added.

But it also said: "There are no preconditions if they really want to solve the problems through dialogue."

The party, which won elections in 1990 yet was never allowed to govern, also denied that Aung San Suu Kyi had called for economic sanctions, although she has publicly discouraged foreign investment.

Some analysts questioned whether the junta's gestures would be enough, saying the situation in Myanmar -- ruled by the military since 1962 -- remained largely unchanged.

"I think they recognise they have to do something without really giving up any power, they have to make a public gesture," said David Steinberg, a Myanmar expert from Georgetown University in the United States.

"But it does not amount to anything right now given the leadership... I would say right now it is the status quo, with a few frills attached."

The official New Light of Myanmar paper said the appointment of a liaison official for Aung San Suu Kyi was suggested by UN envoy Ibrahim Gambari during his mission here last week.

A bloody junta crackdown on peaceful protests led by monks in Yangon last month left at least 13 people dead and roused an international outcry.

The United States, France and Britain are pushing for a UN Security Council statement this week condemning the regime, but Myanmar's ally China is leading a drive to soften its tone.

China's foreign ministry spokesman Liu Jianchao on Tuesday said that Beijing opposed any strong pressure against Myanmar, which it warned could exacerbate tensions.

"Sanctions or pressure will not help to resolve the issues," he said.

In an apparent attempt to forestall any punitive UN action, the junta has made a series of conciliatory moves.

Over the weekend, state media trumpeted the release of nearly half of the more than 2,100 people arrested during September's rallies, and said the military had donated thousands of dollars as well as food and medicines to monasteries.

But the junta's tough talking in its mouthpiece the New Light of Myanmar on Tuesday demonstrated that conditions on the ground remained oppressive.

The paper warned that nearly 1,000 people still being held over the protests could face jail sentences.

"Anyone who is detained for his violation of law must be charged and serve prison terms if he is found guilty," it said.

It also accused pro-democracy protesters of derailing the economy of the impoverished nation, saying the mass rallies "made the people poorer" because restaurants and shops had to be closed.

Meanwhile, the BBC reported that a diplomat at Myanmar's London embassy has resigned to protest the "appalling" crackdown.

Ye Min Tun, a second secretary at the embassy, according to British government records, said Myanmar's military leaders had ignored the people's wish to negotiate.

The protests began in mid-August over outrage at an overnight hike in fuel prices that left many commuters unable even to afford the bus fare to work.

But the movement took off in late September when Buddhist monks led up to 100,000 supporters onto the streets in peaceful marches that became the most potent threat to the regime in almost two decades.

The protesters were only silenced when the junta unleashed baton charges, tear gas and live rounds.