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By Angus McDowall
MANAMA, Feb 10 (Reuters) - Bahrain's government and opposition began reconciliation talks on Sunday for the first time since July 2011 to try to end two years of political deadlock in the strategically vital Gulf Arab island kingdom.
Home to the U.S. Fifth Fleet, the tiny state has been hit by unrest since mass pro-democracy protests in early 2011, becoming a front line in a region-wide tussle for influence between Shi'ite Muslim Iran and Sunni Arab states such as Saudi Arabia.
The mass disturbances were crushed but demonstrators drawn mainly from Bahrain's Shi'ite majority have continued small protests on an almost daily basis demanding the Sunni ruling family call elections and create a constitutional monarchy.
While opposition members have expressed very cautious optimism that the talks represent a meaningful step forward, they have also voiced concerns that the agenda remains unclear.
The main opposition Wefaq movement will decide on Monday whether to continue with the dialogue based on Sunday's initial meeting, Khalil Ibrahim, a senior Wefaq official, said ahead of the talks.
"We agreed with all our political parties to evaluate the first meeting and decide. We will decide tomorrow," Ibrahim said. Wefaq is the largest in a coalition of six opposition groups calling for a constitutional monarchy.
The opposition walked away from reconciliation talks in July 2011, saying they were not carried out fairly.
Wefaq has commanded nearly half the electorate in past parliamentary votes but the government has refused to budge on opposition demands to give the elected chamber of parliament the power to form cabinets.
"We hope we can reach in the first sessions a good agenda that will be acceptable to all," said Samira Rajab, Bahrain's information minister.
Rajab said the justice minister and two other ministers would attend the talks.
Of the 24 other participants, eight will be from the opposition, eight from pro-government parties and eight from Bahrain's national assembly, made up of the appointed Shura Council and an elected chamber.
"The issue in this country is between the government and the opposition. They are the real stakeholders. But there are lots of others who will sit around the table," said Jasim Husain, a former Wefaq member of parliament.
During the 2011 talks, opposition members complained that Wefaq was given only one out of 60 seats in the dialogue, the same number as very small pro-government parties.
The government has accused the opposition of acting on behalf of Tehran, which has denied the accusation.
Opposition and human rights activists fault the government for what they describe as severe sentences for protesters and the violent tactics used to suppress demonstrations.
About 35 people died during the 2011 unrest and in the two months of martial law afterwards, according to an independent commission of inquiry, but the opposition says at least 80 died.
The government points to its record in implementing some reforms to the police and judiciary, increasing powers for the elected parliament and appointing an independent inquiry that criticised the country's response to unrest.
But opposition figures have said these are cosmetic, since they do not curtail the ruling family's grip on ultimate power.
The opposition has said its main conditions for continuing the talks are that ruling family members attend, that the talks bring about decisions rather than recommendations, and that the result is put to a public referendum.
(Reporting By Angus McDowall, Editing by William Maclean and Richard Meares)