By Mohammed Ghobari
SANAA (Reuters) - Tens of thousands of Yemenis converged on the capital Sanaa on Monday in a demonstration organized by the Shi'ite Houthi movement, demanding the government rescind a decision to curb fuel subsidies and calling on the administration to resign.
The three-hour demonstration, mostly by Shi'ite Muslims, was the latest escalation by the Houthis, whose fighters have repeatedly fought government forces since 2004.
They have been trying to tighten their grip on the north as the majority Sunni country moves toward a federal system that will devolve more power to regions.
The unrest is yet another challenge to President Abd-Rabbu Mansour Hadi, who has struggled to restore stability to a U.S.-allied country next to major oil exporter Saudi Arabia and is home to one of al Qaeda's most active wings, al Qaeda in the Arabian Peninsula (AQAP).
The demonstrators in central Sanaa chanted slogans calling for the fall of Prime Minister Mohammed Salem Basindwa's administration and waved posters accusing the government of corruption and describing the law to remove fuel subsidies as "a deadly dose for the people".
Security forces did not try to stop the protesters.
Houthi tribal leader Abdul Malek al-Houthi called for the demonstration in a speech broadcast late on Sunday on his television station.
"If the authorities do not heed our demands until Friday, there are a number of legitimate pressure tactics," Houthi said, without elaborating about what they might be.
"We seriously warn against any aggression on our revolutionary Yemeni sons and we affirm that we will not be idle towards any crime committed against our people," he said.
Government officials could not immediately be reached for a comment on the demands.
After three hours, the protesters withdrew to set up a camp on the outskirts of the capital.
Yemenis are unhappy about the government's decision to raise fuel prices in late July to cut energy subsidies to ease the burden on its budget deficit. The government spent about $3 billion on subsidies last year, nearly a third of state revenue.
A previous attempt by the government to cut subsidies in 2005 led to unrest that left some 20 people dead and over 200 wounded. The reform was canceled.
Some analysts said the Houthis were using the popular fuel subsidies issue as an excuse to demonstrate over their main goal, however.
"In the end, the Houthis want a new government that they can join," said Ali Saif Hassan, an analyst at a local non-governmental organization.
The Houthis are not represented in Basindwa's national unity government, which was formed in 2011 after long-serving President Ali Abdullah Saleh stepped down under pressure from demonstrators demanding democratic and economic reforms.
President Hadi has promised a more inclusive government after a new constitution is passed later this year.
(Writing by Yara Bayoumy; Editing by Sami Aboudi and Sonya Hepinstall)