Saudi Arabia's King Abdullah has ordered that state employees on temporary labour contracts be given permanent jobs, in another apparent bid to insulate the kingdom from a wave of protests in the Arab world.

The top oil exporter has so far escaped major protests against poverty, corruption and oppression that have spread through the region.

Abdullah returned home on Wednesday from three months of medical treatment abroad for back treatment and unveiled benefits for Saudis worth around US$36 billion to address social pressures such as unemployment and housing. Part of the funding will come from Saudi's reserves, thought to be boosted by years of high oil prices.

On Sunday, the king, who is around 87, also ordered all Saudi nationals in temporary public sector jobs be given permanent employment, state news agency SPA said.

SPA gave no details but Banque Saudi Fransi Chief Economist John Sfakianakis said some 90,000 would benefit.

No political reforms, such as municipal council polls, have accompanied the state handouts despite repeated calls by opposition groups. Saudi Arabia has no elected parliament or parties and allows little public dissent. In an open letter published on Sunday, around 100 Saudi intellectuals, activists and university professors called on the king to launch political reforms and allow citizens to have a greater say in ruling the country.

Saudi stability is of global concern. A key U.S. ally, the top OPEC producer holds more than a fifth of world oil reserves.

Part of the king's handouts will go to new funds to help Saudis to get housing loans, a pressing issue for the Gulf Arab state's rising local population of 18 million.

"We are looking into two new initiatives... to facilitate obtaining credit," Finance Minister Ibrahim Assaf told Al Arabiya channel.

"The citizen can go to the banks and tap a special fund. This makes it possible for the banks to give more credit and decrease the costs for the citizens," Assaf said.

Saudi Arabia has been considering a mortgage bill for many years but Saudi analysts see no fix for the housing issue unless the king addresses the extent of land which is owned by royals.

Saudi Arabia has pledged to spend $400 billion until 2013 to upgrade its infrastructure and has launched a plan to build five economic and industrial cities to create new jobs.

But Sfakianakis said the king's order to enlarge the pool of permannent Saudi state employees would not help government plans to encourage more Saudis to work for the private sector.

"Enlarging the public sector is not going to help shift away from the public sector mind set. It does try to include more people under the umbrella of the state but the labour structure is not changing," he said.