Yemen's state news agency reports that Vice President Abd al-Rabuh Mansur Hadi has set up a unity government to transfer power from loyalists of embattled President Ali Abdullah Saleh.

The Saba agency says the vice president issued a decree approving formation of the government headed by newly-appointed Prime Minister Mohammed Basindwa, who is from the opposition.

The creation of a national unity government was stipulated under the Gulf-sponsored agreement signed by President Ali Abdullah Saleh last month to transfer power to his deputy as part of a transition to democracy.

The Cabinet will be equally divided between Mr. Saleh's supporters and the opposition. Saleh loyalists will run the ministries of defense, foreign affairs and oil, while the opposition will head the ministries of interior, finance and information.

Mr. Saleh's 33 years in power will officially end in February when Yemenis go to the polls to elect a new president. The Gulf plan agreed to by Mr. Saleh and Yemen's main political parties allows him to remain president in an honorary capacity until that election.