* Underground govt says junta prolonging rule with NLD ban

* Ruling party will be punished - state TV

* UN alarmed at violence in Chin State

* Military has promised election within 2 years

MAY 21

Myanmar's junta-appointed election commission will dissolve Aung San Suu Kyi's political party for vote fraud in a November election, local media reported on Friday, citing a commissioner, who threatened action against 'traitors' involved.

News sites Myanmar Now and the Irrawaddy said the announcement was made at a meeting on Friday with political parties that was boycotted by many, including Suu Kyi's National League for Democracy (NLD).

The army seized power on Feb. 1, overthrowing and detaining the elected civilian leader Suu Kyi, who led a non-violent struggle against dictatorship in the last two decades of the military's 1962-2011 rule of Myanmar.

The military justified its coup by accusing the NLD of obtaining a landslide victory through a manipulated vote, though the electoral commission at that time had rejected its complaints. The NLD says it won fairly.

The military has pledged to hold an election within two years, and hand power to the winner.

The NLD had committed fraud 'so we will have to dissolve the party's registration', the chairman of the junta-appointed Union Election Commission (UEC), Thein Soe, was cited in the reports as saying.

He was quoted saying those involved in election fraud 'will be considered as traitors' and action taken against them.

A spokesman for the military council did not answer calls seeking comment.

In its nightly news bulletin, state-run MRTV carried a report on the meeting of parties, which showed footage of Thein Soe, with his remarks summarised by an announcer.

MRTV made no specific mention of disbanding the NLD, but quoted Thein Soe as saying 'unlawful actions of the ruling party will be punished'.

The National Unity Government (NUG), an underground alliance of pro-democracy groups that includes the NLD, said the banning of the NLD was a military ploy to cling to power.

'The announcement that the junta's obedient electoral commission is banning the National League for Democracy is a blatantly undemocratic attempt to prolong military rule in defiance of the people,' Dr Sasa, spokesman and minister in the shadow government, said in an emailed response to Reuters.

COUNTRY IN CHAOS

Myanmar has been in chaos since the coup, with daily protests, marches and strikes nationwide against the junta, which has responded with lethal force, killing more than 800 people and arresting nearly 5,000, according to the Assistance Association for Political Prisoners activist group.

The junta has disputed that number. Reuters is unable independently verify casualties and arrests.

The military has struggled to impose order and is seeing fatal attacks on junta-appointed administrators, while fighting has erupted on numerous fronts between soldiers and newly formed and established ethnic minority armies in border areas.

Local media reported fighting between rebels and the military in Kayah state bordering Thailand on Friday, the latest flashpoint.

Thousands of people have been displaced after artillery and helicopters were used during fighting between troops and a civilian militia in Mindat, a small hill town in northwestern Chin State, close to India.

The United Nations said it was alarmed by the violence there and urged access for humanitarian help.

The NLD was formed around leading opponents of military rule during a student-led uprising in 1988 and has won every election it was allowed to contest.

It was disbanded in 2010 for failure to register for an election held under a military-drafted constitution, but Suu Kyi contested subsequent polls after reforms introduced by the retired generals in charge of a nominally civilian administration.

Co-founded by Suu Kyi, the NLD won a majority of seats in a 1990 election for a constituent assembly, but the junta did not recognise the result and it took until 2015 for her to come to power with a landslide win. Nobel laureate Suu Kyi, 75, faces numerous charges filed in two courts, the most serious under a colonial-era official secrets act, punishable by 14 years in prison.

She has been allowed to speak with lawyers only via a video link in the presence of security personnel.

Myo Sat Tway, a politician with the People's Pioneer Party, told Reuters he attended Friday's meeting but did not hear the commissioner say specifically that the NLD would be dissolved.

'When some political parties asked what extent and when action will be taken against NLD, he do not answer the question,' Myo Sat Tway said.

Separately, the foreign minister of Japan, a major donor and important investor in Myanmar, on Friday said his country would have to rethink its aid provision to Myanmar if the situation there did not improve.