By Duncan Miriri and C. Bryson Hull

NAIROBI (Reuters) - Kenya's opposition on Wednesday called off street protests to try and force a power-sharing deal, while President Mwai Kibaki said he would create the prime minister's post that his rivals have been seeking.

Opposition leader Raila Odinga and Kibaki have come under pressure from at home and abroad to compromise over Kibaki's disputed re-election in a Dec. 27 vote, which sparked ethnic violence that killed 1,000 people and displaced 300,000.

Fears of further violence grew when Odinga's Orange Democratic Movement (ODM) last week said they would take to the streets again, exerting the last real leverage they have over political talks between government and opposition negotiators.

"We ... are committed to the talks. We have postponed until further notice any actions planned for tomorrow," Odinga told reporters, after meeting with mediator Kofi Annan who had asked him to call off the demonstrations.

Previous protests after Odinga accused Kibaki of rigging the election, which the president denies, degenerated into looting and rioting, and provoked an often fatal police response.

Exasperated that discussions had reached deadlock, the former United Nations chief on Tuesday suspended them and told Odinga and Kibaki that they would have to make the decisions themselves. He met both on Wednesday.

After meeting Annan, Kibaki in a statement said "pending issues were not insurmountable".

And although the government negotiating team has put the idea forward, Kibaki himself said for the first time that "the office of prime minister, and two deputy prime ministers would be created under the current constitution".

The focus of the talks had shifted toward the nature of a power-sharing deal to give Odinga a prime minister's position, and other ODM members cabinet jobs. But the sides have differed on how to enact those changes and to what extent.

Kibaki "cautioned on the dangers of piecemeal amendments to the constitution" and said Kenyans would undertake a comprehensive review of the document in the next one year.

The government says Kenya's laws and current constitution must guide any deal now. The opposition is demanding changes now, without a nationwide vote on them.

'BRIDGEABLE'

Annan said he believed the two sides could strike a deal.

"Issues that divide the parties are bridgeable ... with political will," Annan told reporters after his meetings. "The solution must be found in the mediation room."

The crisis that exploded after Kibaki was sworn in on Dec. 30 amid Odinga's claims the vote was rigged seriously hurt Kenya's reputation as a stable, prosperous nation in a turbulent corner of Africa.

It also laid bare schisms over land, wealth and tribe that have festered since before independence from Britain in 1963, which have been aggravated by politicians in the decades since.

Since the early 1990s, Kenyans have been clamouring for a change to a 45-year-old constitution which most agree gives the president vast powers without any real checks and balances.

The stalled negotiations also prompted criticism from the United States and European Union, in the latest diplomatic pressure to force a rapid resolution to a crisis in an African nation viewed as critical to the continent's stability.

European Union aid chief Louis Michel said there was no alternative to a political solution to Kenya's crisis but added: "Individuals who obstruct the national dialogue process or who encourage violence will have to face the consequences. The European Union is determined to take all appropriate measures."

U.S. Secretary of State Condoleezza Rice expressed frustration at the Kenyan leaders' failure to end their political standoff and said Washington would take action if a solution was not reached.

Rice, speaking during a trip to China on Tuesday, said: "We will draw our own conclusions about who is responsible for lack of progress and take necessary steps." She did not elaborate.

Tanzanian President Jakaya Kikwete, in Kenya in his capacity as the African Union chairman, also made the rounds trying to push through a deal and said he was extending his stay.