Bahrain has seen its worst unrest since the 1990s after a nascent youth movement emboldened by similar protests elsewhere in the Arab world took to the streets last month and were met with heavy-handed police violence that killed seven.

The country, an ally of the United States and top oil exporter Saudi Arabia, is ruled by the Sunni Al-Khalifa family and its majority Shias have complained of discrimination in government jobs. The government denies this.

Bahraini Minister of Interior Sheikh Rashed Bin Abdullah Al-Khalifa told local newspaper editors on Saturday that King Hamad Bin Isa had ordered a round of new hires in a number of government institutions, including 20,000 jobs in his ministry.

"We hope this step will have a positive effect on the safety and security of citizens," Al-Wasat daily quoted the minister as saying. "The minister said national dialogue was the way to achieving political stability and of raising demands."

The opposition said it interpreted the announcement as an attempt to appease Shia protesters who say government jobs have been closed to them.

"I think it's mainly meant for Shias, in particular for the coming graduates. Unequal opportunities is one reason why we're having people in the street," Jasim Husain of Wefaq, the main Shia opposition group, said.

"The Ministry of Interior has been slow in creating jobs, in particular for Shias."

There is no official figure of how many are employed by Bahrain's armed forces and its police and security forces. Officials at the Ministry of Interior declined to comment but said details of the plans would be released later this week.

Bahrain has granted citizenship to Sunni foreigners serving in its armed forces, limiting the number of secure government jobs its Shia population can potentially access.

The practice has long been a bone of contention for the opposition who see it as an attempt to alter the sectarian balance, an accusation the government denies.

The government says all naturalisation is done in full transparency and in accordance with Bahrain's immigration polices. Bahrain's king said last year the government would start to limit the practice.

Clashes erupted last week between residents in Hamad, an area where both Shias and Sunni live, including foreigners who were granted citizenship. It was not clear what sparked the clashes that were contained by police forces, but residents said that Syrians were involved in the fighting with metal sticks and batons.

Husain said the new jobs could potentially be funded by the Gulf Cooperation Council (GCC) that is currently discussing a joint fund to back Bahrain and Oman, which also has seen unrest.

Bahrain's opposition groups, including Wefaq, demand the resignation of the government and a new constitutional monarchy. Currently, parliament has little powers, cabinet is appointed by the king, and most ministers are from the ruling family.

But many of the thousands in Bahrain's youth movement who are occupying Manama's Pearl Square and staging daily protests want the complete ouster of the ruling family.

Hundreds staged an hours-long sit-in on Sunday outside the palace in Manama that serves as an office to Prime Minister Sheikh Khalifa Bin Salman al-Khalifa, the world's longest serving head of government.