Myanmar's prime minister has been ousted and put under house arrest after a lengthy power struggle in which hardliners in the military government appear to have come out on top, Thai officials and diplomats said yesterday.

Mynamar state television and radio said Khin Nyunt had been "permitted to retire for health reasons" and replaced by Lieutenant-General Soe Win, a conservative in his mid-50s considered to be the number 5 figure in the government.

Diplomats said prospects for political change looked dimmer than ever in a country considered a pariah by the West for its detention of democracy icon Aung San Suu Kyi and a dismal rights record.

"Change has never looked farther off than it is now," a Bangkok-based Western diplomat said.

Myanmar's state media said the retirement had been authorised by Senior General Than Shwe, the head of the junta, but gave no further details in an announcement which followed the usual pattern after the ouster of a senior figure.

The removal of Khin Nyunt, a relative moderate, was not expected to trigger a wider conflict within the military, but it consolidated the grip of the hawks with the arrival of Soe Win, a trusted Than Shwe deputy.

Thailand said Khin Nyunt, 64, had been stripped of the prime minister's post and put under house arrest.

"The person who signed the order said Khin Nyunt had been involved in corruption and not suitable to stay in his position," Thai government spokesman Jakrapob Penkair told reporters after a cabinet meeting in Mae Sot, a town near the Myanmar border.

Witnesses said security had been tightened in Yangon, with troops seen in the streets. But the city was calm.

Diplomats said that according to rumours Khin Nyunt was arrested by officers loyal to army commander and Vice Senior General Maung Aye, the number two in the junta. Speculation has been rife for months of a widening rift between Khin Nyunt, who had struggled since he was appointed last year to implement his "roadmap to democracy", and Than Shwe.

The military has ruled the former Burma in various guises since 1962 and refused to hand over power to Nobel laureate Suu Kyi after her National League for Democracy (NLD) won a 1990 election.