The risk of Yemen, the poorest Arab state long on the brink of collapse, descending further into bloodshed is a major worry for Saudi Arabia and the United States, which fear an active al Qaeda wing could strengthen a foothold in the Arabian Peninsula.
Witnesses said security men opened fire to stop protesters marching through the city of Taiz, south of the capital. They were trying to join a pro-democracy rally that would take them past a palace belonging to Saleh.
"There were thousands in a march who came from outside Taiz, but the police, army and gunmen in civilian clothes confronted them, opening fire with bullets and tear gas," said Jamil Abdullah, a protest organiser.
"They opened fire heavily from every direction."
A woman watching the clash from her balcony was shot dead, and medical sources said 25 others were shot and wounded in the town, scene of some of Yemen`s largest anti-Saleh protests.
Both Western and Gulf Arab allies of Yemen have tried to mediate a solution to a three-month crisis in which protesters inspired by Arab revolts against autocratic rule in Egypt and Tunisia have sought Saleh`s immediate ouster.
Saleh, seeing political allies desert him en masse, agreed in principle to a proposal by Gulf Cooperation Council foreign ministers to step down in exchange for immunity from prosecution for himself, his family and aides.
But the plan, yet to be formally agreed, would allow Saleh to stay in power for a further 30 days before stepping down. Analysts say that could leave room to make trouble.
In Taiz, clashes lasted for several hours, with heavy gunfire reported. Dozens were arrested, activists said.
Similar clashes broke out in the town of Ibb, where one protester was shot dead and a dozen were wounded by live fire as police tried to break up a march, witnesses said.
Security forces also shot dead a protester in the southern province of al-Baida while trying to disperse a protest.
Yemen`s main opposition coalition, made up of Islamists and leftists, has welcomed the Gulf plan but stopped short of a full endorsement and said it would stay out of a unity government during a transition period.
Some opposition members, who asked not to be identified, told Reuters on Sunday they did not want to be associated with a unity administration in case Saleh, a shrewd political survivor, did not resign after a month.
The arrangement proposed by Gulf states would involve Saleh appointing a prime minister chosen by the opposition to form a unity government made up of ministers from all sides. He would resign, handing over to a vice president from the ruling party.
An opposition refusal to take part could stymie the plan, and opposition sources said the U.S. ambassador had pushed the group to come on board fully in a meeting on Sunday.
Opposition leaders met on Monday to formulate a stance and may talk again with Gulf and Western diplomats as early as Tuesday to give a response. They were expected to issue a statement on their position within hours.
"We met with Gulf and Western ambassadors in Sanaa to discuss the Gulf initiative and receive clarifications (on the Gulf plan`s stance) on the continuation of protests," an opposition source said, adding that more meetings would follow.
Protesters, who want Saleh prosecuted over a crackdown in which more than 125 protesters have died, remain unconvinced by the proposed deal and have called for more demonstrations.
The mostly young protesters, who include large cross sectors of Yemeni society from tribesmen to northern Shi`ite rebels and southern separatists, have expressed fears that Saleh`s inner circle could slow or stop his departure. (*)