President Ali Abdullah Saleh's apparent readiness to deal more violently with protests against his 32-year rule could drive Yemen into a Libyan-type conflict.

Popular revolts in Egypt and Tunisia inspired more unrest in Yemen, an impoverished Arab country that was already seething with rebellions in the north and south and widespread discontent with decades of economic hardship, corruption and misrule.

One person was killed and scores were hurt on Sunday when police fired bullets and tear gas at protesters in Sanaa. Five people died in anti-Saleh rallies across Yemen the day before.

Sarah Phillips, at Sydney University, said the bloodshed showed Saleh had few cards left other than to hit out hard.

"I doubt that anyone will be moved by his offers of dialogue as they have been offered insincerely on so many previous occasions and it is plainly an act of desperation."

Demonstrators, mistrusting Saleh and unconvinced by U.S. calls for dialogue, insist that he step down now, even though some in established opposition parties might still seek a deal.

"Too many years of back-room deals between the regime and the opposition coalition has left the protesters with no faith in either. All they want is for the regime to fall," said Yemeni political analyst Abdul-Ghani al-Iryani.

"They are not open to any dialogue, as it may be hijacked by the same suspect political elite."

Saleh has made many verbal concessions, promising to step down in 2013 without bequeathing power to his son and offering a new constitution giving more powers to parliament, as well as announcing an array of handouts the treasury can ill afford.

But he has rejected opposition plans for a phased transition of power this year, even as he haemorrhages support from previously allied tribes, Islamist clerics and politicians.

A rift between Saleh's Sanhan clansmen, who dominate top military and security posts, and sons of his powerful former ally, the late Sheikh Abdullah al-Ahmar, threatens to turn the political struggle into a tribal feud.

"The spectre of descent into tribal warfare makes many Yemenis nervous," said the International Crisis Group (ICG) last week. "Rules of the game are in flux, presenting an uncommon opportunity for serious reform, but also for violent conflict."

The United States, which along with Yemen's main financial backer Saudi Arabia, has long seen Saleh as a bulwark against a dynamic al Qaeda network, has called for dialogue on a "peaceful transition" to ward off a collapse into Libyan-style conflict.

But Iryani said U.S. and European backing for Saleh's latest offers indicated "misplaced good faith in regime intentions" and had backfired, perhaps encouraging the president to lash out.

Saleh, 68, has not subjected Yemen to the same brutality of the former police states in Egypt and Tunisia, preferring to co-opt his foes, allow some space for dissent and dish out money and favours to important tribes and the military-security elite.

Yet if he feels cornered, he may decide to apply more force.

Iryani said the United States and European Union should warn Saleh clearly that this would trigger Libya-style sanctions.

Phillips said at least one prominent member of Saleh's Sanhan elite had declared support for the demonstrators, threatening the cohesion of his inner circle.

"With that cohesion visibly cracking, it is difficult to see how his leadership could survive for very much longer, at least without massive external support and considerable brutality."

Saleh, who can still count on support from some tribesmen and the beneficiaries of his rule, also plays on what the ICG report called "a large wellspring of negative legitimacy, given the absence of a clear or popular alternative leader".

But his government has failed to meet the basic needs of Yemen's 23 million people. Oil wealth is dwindling. Water is running out. More than two-fifths of Yemenis live in poverty.

Unemployment is around 35 per cent - rising to 50 per cent for those aged between 18 and 28, according to U.N. figures.

The ICG said any compromise would require Saleh to deliver on far-reaching reforms of a system that has relied on patron-client networks and the military-security apparatus.

The opposition and civil society activists should also be wary of "the risk of pushing without compromise or dialogue for immediate regime change" which could start a cycle of violence.

Pauline Baker, president of the Washington-based Fund for Peace, said attacks on the protest camp were not symbolic, but "a preview of what may come, including the kind of brutal crackdown used by (Libyan leader Muammar) Gaddafi".

The alternative to a political settlement was dire.

"Yemen is one of the weakest states in the region and if violence continues, the outcome could be a collapsed state, not just one that sees a change in regime," Baker said.