MANAMA (Reuters) - Thousands of Bahrainis shouting "we are victorious" gathered for a rally for political reform on Saturday, in the first large demonstration since the Gulf Arab state crushed a democracy protest movement in March.
Bahrain brought in troops from Saudi Arabia and United Arab Emirates in March and introduced martial law, which ended last week, to stop the protests against the Sunni Al-Khalifa family that rules over a Shi'ite majority population.
The government said the protests had a sectarian agenda and help from Shi'ite power Iran, just across the Gulf waters. The opposition denies this.
"Some try to manipulate our demands, to make them Shi'ite demands. This is not true. We are not calling for an Iran, but to build up our political reforms together, Shi'ite and Sunni, which will benefit all Bahrainis," said Sheikh Ali Salman, head of the Wefaq opposition group which organized the event.
"We will continue peacefully and we will continue our peaceful demonstrations," he said, as the crowd roared back: "Peaceful, peaceful!"
The rally will likely be seen as a show of strength by Wefaq, Bahrain's leading Shi'ite opposition group, as it heads to a national dialogue called by the king for next month.
"Wefaq wants to encourage people to get back out after months of fear. It's a good sign ," said protester Fatima.
The government said it granted permission for the rally, held in a large square in the Shi'ite district of Saar, west of the capital and away from central Pearl Roundabout, epicenter of the earlier protests inspired by uprisings in Tunisia and Egypt.
Protesters waving Bahraini flags spilled out into the streets and dozens watched from nearby rooftops.
People drove in from around the city, causing traffic jams of more than 2 km long. State helicopters buzzed over crowds raising signs that read "The nation is for everyone."
Opposition figures more than 10,000 people attended the rally. The Interior Ministry said 4,000 people were gathered.
Barbed wire and armored vehicles guard Pearl Roundabout in Manama, where protesters camped out for about six weeks, to prevent it from becoming a focal point for protests again.
But protesters in Saar described a new sense of optimism.
"I think the crowd speaks for itself," said Fadel, carrying his small son, wrapped in a Bahraini flag. "Hopefully, this will be the next Pearl Roundabout."
King Hamad bin Isa has offered a new dialogue with opposition groups starting in July. Wefaq said it would organize more rallies until then, and may plan a march for next week.
"The dialogue should offer real political solutions, it should not be cosmetic talk. We are serious about this dialogue," Salman said in his 30-minute speech.
"They say the Shi'ites want a special government for themselves. No, we want a civilian state and an elected government for all... This is what we demanded in Pearl Roundabout and it is what we will again call for here."
Wefaq organizers quietened those in the crowd who tried to chant "Down with the government," frustrating some protesters.
"I think the people want the fall of this regime. After the repression and the killings, how can we go back?" said protester Amal, swathed in a black veil.
The government appointed its parliament speaker on Saturday to lead the national dialogue, the state news agency said, but the opposition said Crown Prince Salman -- seen as leader of a moderate wing of the ruling family -- should head the talks.
Khalifa al-Dhahrani, speaker of the Council of Representatives, said he hoped to bring "all parties concerned with matters of the state" into the dialogue.
Wefaq's Khalil al-Marzooq said Dhahrani was opposed to many of the opposition's core demands.
"He has previously objected to discussing reforms over elections, constitutional amendments and the issue of discrimination," he said. "Genuine dialogue must be with the prince or the king because we need to discuss the central issues which are between the people and the ruling family."
Bahrain's cabinet is dominated by the ruling family and the king also appoints all members of an upper assembly, minimizing the powers of the elected parliament.
At the rally, Shi'ites said they broke a barrier of fear after over two months of military rule, when hundreds were detained or dismissed from their jobs and dozens were put on trial on charges from incitement to trying to overthrow the system.
"This needed to happen. The government thought they could suppress everything with the state of emergency. It seems they did not," one protester said.
(Reporting by Erika Solomon, writing by Andrew Hammond and Erika Solomon, editing by Alison Williams)