The main opposition party welcomed the move to hold a plebiscite next month on whether the presidency or a parliament should govern the country.

"The referendum will give people the choice to decide whether they want to be ruled by a presidential or a parliamentary system of government," Maldivian Democratic Party (MDP) founder Mohamed Latheef said.

Currently the country has an appointed body known as the Majlis, which can comment on, but not change presidential legislation.

Political parties were allowed in the Maldives for the first time in June 2005 in line with reforms announced by President Gayoom who was originally elected in 1978 and is currently Asia's longest-serving head of state.

Home to around 300,000 Sunni Muslims, the Maldives has yet to hold multi-party elections and Gayoom's opponents have accused him of clinging to power.

The referendum is set to be held on August 18, Maldivian officials said.

"We are pressing for a parliamentary or Westminster-style of government, but the ruling party prefers a presidential system," Latheef told AFP.

The dissident MDP has been pressing for a multi-party system in the nation of 1,192 tiny coral islands scattered some 850 kilometres (550 miles) across the Equator.

Latheef, who operates out of Sri Lanka, said his party had also been pushing the Maldivian government to invite international observers to monitor the crucial vote next month.

"Given the political culture, we feel international observers are needed to monitor the August 18 referendum," he said.