Laurent Nkunda`s rebel group announced Tuesday it was withdrawing fighters from around a strategic eastern town in the Democratic Republic of Congo to boost a UN envoy`s peace mission, AFP reported.

The move came after President Joseph Kabila sacked his army chief over a series of battleground defeats and France called on the UN Security Council for a surge of peacekeeping forces to protect tens of thousands of displaced.

Nkunda`s National Congress for the Defence of the People (CNDP) said it wanted UN peacekeepers to police a zone created by their withdrawal from two frontlines, including near the strategic town of Kanyabayonga.

The CNDP decided it "must make a unilateral withdrawal of its troops for a distance of 40 kilometres (25 miles) on the Kanyabayonga-Nyanzale front and the Kabasha-Kiwanja front," a rebel statement said.

It said the CNDP wanted to "give a new chance" to peace efforts launched by UN envoy Olusegun Obasanjo, the former Nigerian president.

Obasanjo held a meeting on Sunday with Nkunda at his jungle headquarters in the east of the country to try to halt the fighting, amid growing concern for an estimated 250,000 displaced.

UN forces should "take charge of the security of these separation zones and ensure that no other force occupies them," the rebel statement said.

Recent fighting has brought Nkunda`s forces to 20 kilometres (12 miles) from Kanyabayonga, a town of 50,000 and strategic hub for most of the north of the disputed Nord-Kivu province.

The town was the scene of an armed clash Tuesday in what a pro-government militia said was a "friendly fire" incident with government forces.

Government soldiers looted villages and attacked local people after the incident, according to the leader of the Mai-Mai militia, General Lafontaine.

Residents said the army soldiers unleashed a fresh wave of looting on Sunday, taking household goods, cattle as well as motorcycles and bicycles. Some women alleged they had been gang-raped.

Several homes in the town, which was practically deserted on Tuesday except for some people who had come to forage for food, were looted and many brick houses burnt. Several front doors bore the marks of forced entry.

"I fled to the bush on Friday but I was chased out of there by the army," said a 24-year-woman who identified herself as Olivia. "After arriving here today I heard gunshots. I don`t know where to turn."

Flanking her, Catherine Kapinga, recounted how she was raped by 16 army soldiers late last week while "I was fleeing this place to go to Kayna.

"I just want to be able to consult a doctor," she said.

Hersdman Julien Kambale returned home Tuesday but found it bare.

"They have taken my sheep, my chickens and my mattresses," he said.

The other flashpoint town of Kayna was calm on Tuesday afternoon with soldiers patrolling the streets and locals loading their belongings on to waiting trucks, an AFP journalist reported.

The UN Mission in Congo (MONUC) confirmed there had been fighting between the militia and government forces near Kirumba, a district north of Kanyabayonga.

France on Monday presented a UN Security Council draft resolution that would increase the number of UN forces in Congo by about 3,000, diplomatic sources told AFP.

The draft calls for a temporary increase in the size of the UN mission`s "authorized military strength by up to 2,785 military personnel, and the strength of its formed police unit by up to 300 personnel."

It would authorize the deployment of those additional personnel until 31 December 2008 when the mandate of the UN`s mission comes up for renewal.

The force, in place since 2001, currently has 17,000 soldiers, including some 5,000 in eastern Congo, where fighting between government forces and the rebels has intensified in recent weeks.

The Congolese president named a new military chief of staff, General Didier Etumba Longomba, on Monday following a series of humiliating reversals for the army in the east.

Longomba replaced Dieudonne Kayembe on the day a court martial condemned one government soldier to life imprisonment for war crimes including rape. Three others were sentenced to the same terms for abandoning their posts and looting.