Mexico's government and Maya Indian guerrillas have stepped back from the brink of renewed war and appear headed for fresh talks aimed at ending the year-old peasant rebellion in the southern state of Chiapas.

The army and guerrilla leaders of the Zapatista National Liberation Army have in the past two days reversed some of the aggressive troops movements that plunged Chiapas and the Mexican economy into crisis early last week.Although there has still been no direct contact between Zapatista chiefs and the government of President Ernesto Zedillo, both sides have made concessions aimed at clearing the way for a new round of peace negotiations.

Zedillo first accepted Roman Catholic Bishop Samuel Ruiz, who is widely seen as sympathetic to the Zapatistas, as mediator in the conflict and then withdrew army troops from two communities near rebel strongholds in the Lacandon jungle.

In response, rebel chief Subcomandante Marcos welcomed both of Zedillo's moves and replied by recognizing the Interior Ministry as the president's representative in any dialogue. He had previously called Zedillo's government "illegitimate."

And rebel leaders said Thursday they had pulled some key guerrilla units back to their jungle bases, further cutting the risk of fresh bloodshed.

One Zapatista field commander told reporters the rebel army, which launched its uprising for indigenous rights and democracy last New Year's Day, was prepared to open talks but that they will not be fooled by "deceit, promises, papers or empty talk like those they have given for many years".

When Zapatista guerrillas last week slipped through an army cordon to occupy several towns and highways in areas outside their formal control, tensions soared to their highest point since a cease-fire was agreed in mid-January.

Army and rebel troops were mobilized in a tactical battle for control over large areas of central and northeastern Chiapas, sparking a crisis in Mexico's financial markets.

But no shots were fired and the crisis may have served to speed efforts at finding a negotiated solution.