LAGOS: Nigeria's main militant group on Wednesday declared a 60-day truce in its "oil war" with the government after the release of its leader Henry Okah under an amnesty deal.

The second militant truce in less than a year came into effect just 48 hours after the rebels blew up an oil docking harbour in Lagos in their first attack outside the main Niger Delta oil producing region.

The Movement for the Emancipation of the Niger Delta (MEND) has been attacking major oil companies and the army in the south for more than three years, demanding a greater share of the oil wealth for local people.

The campaign has cut Nigeria's daily oil production by about a third.

"I salute the decision. The ceasefire was as a result of our contact with them," said Timiebi Koripamo-Agary, spokeswoman for an amnesty committee set up by President Umaru Yar'Adua.

"We have made it clear to them that the president is honest and can be trusted and that the government is ready to dialogue with anybody on the need for peace and development," she told AFP.

MEND announced the truce in a statement in which it called for dialogue.

"Starting Wednesday July 15, 2009, the Movement for the Emancipation of the Niger Delta (MEND) will be observing a temporary ceasefire for a 60 day period," it said.

"Hopefully, the ceasefire period will create an enabling environment for progressive dialogue," MEND said, adding that the decision was driven by several factors, notably Henry Okah's release on Monday after nearly two years in jail.

MEND fighters staged their audacious attack on Lagos the night before, killing at least five people.

The rebels said they were ready to start negotiations with the government during the truce but that they wanted an elite military unit deployed in the region to be withdrawn from one specific area, scene of heavy clashes in recent months.

However, Defence Minister Godwin Abbe rejected the notion of making any talks conditional on a troop withdrawal.

He said the government "will make a decision as affecting the deployment of troops when the conditions become ripe enough and when law and order are comfortably established."

Abbe, a retired major-general appointed in a cabinet re-shuffle only Tuesday, had actively pushed the amnesty offer. Treason charges against the MEND leader were also dropped.

But within 12 hours of announcing the ceasefire, MEND threatened to call it off, alleging that government troops were being deployed near its camps.

It said seven gunboats with heavily armed troops were heading toward one of its camps near the Delta/Ondo state border.

"If this information from a very reliable source within the JTF happens to be true, the ceasefire will be called off with immediate effect," it warned in an e-mail statement.

Colonel Rabe Abubakar, spokesman for the Joint Task Force set up to counter the militants, denied there had been any troop deployments, and said the military was "implementing faithfully" the amnesty deal, and that included no troops movements.

However, he said the JTF would continue to provide escorts for oil workers and tankers.

Okah, 45, a marine engineer, was arrested in Angola in September 2007 and was later charged with arms trafficking. The 63 charges he originally faced were reduced to three -- all treason related.

MEND said Okah's release was "a step towards genuine peace and prosperity if Nigeria is open to frank talks and deals sincerely with the root issues" of the militancy.

Okah was the most high-profile militant to take advantage of the amnesty announced last month by Yar'Adua for rebels in the Delta swamps and creeks. The amnesty lasts until October 4.