UPDATE 3-African presidents urge Congo rebels to abandon war
* Great Lakes region leaders want rebels to quit Goma
* M23 accuse army of planning counter attacks
* Oxfam says Goma "a mess" but it still able to work there
* Congo bans protests, citing "undeclared state of war"
By Jonny Hogg and Elias Biryabarema
GOMA/KAMPALA Nov 24 (Reuters) - African leaders called on eastern rebels in Democratic Republic of Congo on Saturday to abandon their aim of toppling the government and leave the city of Goma they captured this week.
The appeal came from heads of state of the central African Great Lakes region who fear that if left unchecked the offensive by the M23 rebels could drag the volatile, ethnically-diverse and mineral-rich region back into another bloody conflict.
Meeting in the Ugandan capital Kampala, they urged M23 to abandon its threat to overthrow the elected government in Kinshasa and to "stop all war activities and withdraw from Goma".
The rebels responded by saying that the Congolese army was reinforcing in the east in preparation for launching counter-offensives on their positions.
"M23 warns the government forces against this new military adventure. We must react with vigour to discourage this new war-like initiative," the movement's political wing said.
The regional leaders' plan proposed deploying a joint force at Goma airport comprising of a company of neutral African troops, a company of the Congolese army (FARDC) and a company of the M23.
The leaders told M23 to withdraw from current positions to not less than 20 km (12 miles) from Goma town within two days, but did not say what the consequences would be if the rebels did not comply.
A spokesman for the Congolese army, known as FARDC, said M23 was illegally occupying territory in the east of the vast country and started the conflict.
"We'll defend ourselves and let's see what the final result is," Colonel Olivier Hamuli told Reuters by phone from Bukavu, the next major city in the rebels' sights.
The rebels, who say they intend to "liberate" all of Congo, have often accused the government of aggression as a pretext for their own attacks.
"NO OTHER OPTIONS"
Regional and international leaders are scrambling to halt the fighting in eastern Congo, the latest bout of violence fuelled by a mix of local and regional politics, ethnic rifts and competition for large reserves of gold, tin and coltan.
The meeting in Kampala brought together Congo's President Joseph Kabila and the heads of state of Uganda, Kenya and Tanzania.
But Rwandan President Paul Kagame, who has vehemently denied accusations by Congo and U.N. experts that his government is supplying, supporting and directing the M23 rebellion, did not attend the summit, although he sent his foreign minister.
The Great Lakes heads of state also proposed that U.N. peacekeepers present in and around Goma should provide security in a neutral zone between Goma and the new areas seized by M23.
They said police that were disarmed in Goma by the rebels should also be re-armed so they can resume working.
Congolese Prime Minister Augustin Matata Ponyo indicated there was no scope for negotiation over the proposals.
"There are no other options other than an acceptance, pure and simple," Matata Ponyo told Reuters, adding Kinshasa would fight to the end to defend its territorial integrity.
GOMA SITUATION "A MESS"
In the Congolese capital Kinshasa, authorities banned protests, citing the need to keep order in what national police chief Charles Bisengimana called a "undeclared state of war".
Goma was calm on Saturday, but the charity Oxfam said the city was feeling the strain as more than 100,000 people fleeing the fighting took refuge in schools and churches.
"The Goma situation is a mess," Tariq Riebl, Oxfam's humanitarian programme coordinator, told Reuters.
Riebl said M23 was allowing Oxfam to operate.
"The main thing is access, and we have that. They (the rebels) are not al Shabaab or the Taliban," he said.
Congolese government troops attempted a counter-offensive against the advancing rebels this week but were forced to pull back to the town of Minova on Lake Kivu, leaving a trail of soldiers' bodies and abandoned equipment in their wake.
M23 forces moved south through the hills towards Minova, in a strategic position on the road to Bukavu, the capital of South Kivu province.
While Kabila's armed forces are on the back foot, analysts remain sceptical the rebels can make good on their threat to march on Kinshasa in the west without significant, overt support from foreign backers.
"Militarily there's a status quo. The M23 can't advance but the FARDC will have big difficulty retaking the territory they have lost. I fear for the population," a senior Congolese military source said.
Kabila, who has said he is willing to hear the rebels' grievances, appointed a new interim head of ground forces late on Friday.
General Francois Olenga Tete takes over from former army boss General Gabriel Amisi, who was suspended on Thursday over charges he had sold arms to other eastern rebels.