They said after meeting President Habibie that political reform would be expedited to allow the polls to take place.

As they were meeting, about 400 students demonstrated outside parliament, calling for a transitional government to be set up.

The Parliament Speaker, Harmoko, said a special team would be appointed to speed up the liberalisation of Indonesia's tightly-controlled political system.

"This is proof of the reform spirit," Mr Harmoko said.

Students want transitional government

Mr Habibie, who took over from former president Suharto last week, has promised a complete revamp of electoral laws, including allowing free formation of new political parties and changes in the electoral system to make it more representative.

Mr Harmoko said after the meeting that a special session of Indonesia's top decision-making body, the People's Consultative Assembly (MPR), would be called late this year or early in 1999 to approve changes in electoral law which will have to precede the polls.

"After the session has decided on elections, they still need time to make preparations which include the participants and the system. This is expected to be completed in 1999," Harmoko said.

"Hang Habibie," the students chanted.

The announcement, however, drew criticism from human rights activists and students who say next year is too long to wait.

Students demonstrating outside the parliament building calling for Mr Habibie and the parliament to step down and give way to a People's Committee until a new president could be found.

"Hang Habibie!" the students chanted, also demanding that former president Suharto be brought to trial.

IMF does not rule out more aid

The International Monetary Fund for the first time on Thursday left open the possibility that its bail-out package to Indonesia could be increased as the post-Suharto political landscape took shape.

IMF's Asia-Pacific director Hubert Neiss, who is visiting Indonesia till Saturday, said there would be no quick fix for the country's crippled economy. He said recent political unrest had made the country's recovery efforts even more difficult.

After a day-long series of separate meetings with President Habibie and opposition leaders, Mr Neiss did not rule out more aid to Indonesia.