Harare - Zimbabwean President Robert Mugabe promised Monday that he and his former foes in a power-sharing government would shortly resolve their differences and said a new administration would be established by the end of this week.

"We will be setting up a government by the end of this week," he told supporters come to meet him at Harare airport as he returned from the United Nations General Assembly opening sessions.

He denied that his partners in the arrangement, prime minister- designate Morgan Tsvangirai who is leader of the Movement for Democratic Change, and Arthur Mutambara, head of a smaller MDC faction, had been deadlocked.

The three signed an agreement two weeks ago to set up an "inclusive government" after two months of intensive negotiations mediated by former South African president Thabo Mbeki.

But the deal ran immediately into trouble as, said MDC officials, Mugabe refused to cede any key ministries to the two other parties, and insisted on keeping home affairs, with the police, finance, justice and local government.

Earlier Monday, the country's powerful labour movement slammed the agreement, with Zimbabwe Congress of Trade Unions president Lovemore Matombo said it "preserves and consolidates the power of the incumbent president, and that (Mugabe's) ZANU(PF) party has got power in all issues."

He said it made Tsvangirai "a ceremonial prime minister."

As Mugabe landed, the centre of the capital was choked with thousands of people - nearly all queuing outside banks in the hope of drawing cash after the central bank raised the withdrawal limit of 1,000 Zimbabwe dollars - about 1 US dollar, not enough to buy a loaf of bread - to 20 000 Zimbabwe dollars.

People started queueing at 2 am, but by noon tempers in the biggest crowd yet seen in the city centre began to fray as the central bank had failed to deliver to the banks the new 10,000- 20,000-Zimbabwe dollar banknotes just issued Monday.

However, potential unrest was avoided when money was delivered at 1.30 and the queues outside the automated teller machines begin slowly to move.

Chronic shortages of cash are among a plethora of crises facing the country, including inflation estimated at 40 million per cent, a wildly collapsing currency, famine, empty supermarket shelves, constant blackouts and water cuts. (dpa)