CAIRO (Reuters) - Egyptian President Hosni Mubarak has proposed a law to set up an appeals court for suspects tried before military tribunals, known for their tough and swift verdicts, a cabinet statement said on Wednesday.

Mubarak has sent the draft bill to both houses of parliament, dominated by his ruling National Democratic Party. Under the present law, only the president can reverse verdicts of a military court.

"This will provide more guarantees for those transferred to the military judiciary," the statement said. It did not say how judges will be selected for the new court.

A set of constitutional amendments, which were approved in a nationwide referendum on Monday, give the president powers to transfer any "terrorism" suspect to military courts.

Military courts have been used most to prosecute members of the Muslim Brotherhood, the country's biggest opposition group, and critics of the government say the amendments were designed to strengthen the ruling party's hold on power.

The proposed bill says military judges will have the same status as those in civilian courts. But political analyst Mohamed el-Sayed Said told Reuters the law did not address the main criticism of the opposition.

"Civilians should not be tried by military courts," he said.

"Military trials are purely political because the military judiciary follows the order of the president, who is the commander-in-chief."

In February, Mubarak transferred 40 Brotherhood members, including the group's third-in-command Khairat el-Shatir to a military court on charges that include money laundering and terrorism.

The Brotherhood operates openly in Egypt, despite being banned since 1954.