(For full coverage of Honduras crisis, click on [nHONDURAS])
* Decree curbing some media, protests reversed
* Crisis talks to begin again with both sides in stalemate
TEGUCIGALPA, Oct 19 (Reuters) - Honduras' de facto government relaxed restrictions on protests and opposition media on Monday as crisis talks dragged into a third week with no agreement on toppled President Manuel Zelaya's return to power.
Zelaya, forced out of the country by soldiers in a June 28 coup, slipped back into Honduras last month and took refuge in the Brazilian embassy. De facto leader Roberto Micheletti responded by deploying soldiers around the embassy, imposing curbs on press freedoms and banning large marches.
Micheletti promised to lift the emergency measures on Oct. 5 after strong international criticism, but the decree was only finally reversed in the official gazette on Monday.
A pro-Zelaya radio station and television channel which had their equipment taken by masked soldiers after the executive order are still off the air.
Negotiations on how to resolve Central America's worst political crisis in decades are set to begin again on Monday. The Organization of American States insists Zelaya be reinstated, which has become the main sticking point in talks.
Micheletti's negotiators said on Friday the Supreme Court should decide if Zelaya can return to office.
But the court ordered the leftist president's ouster, arguing he violated the constitution in a bid to allow for presidential re-election, and is unlikely to allow him back.
The coup has brought back memories of Central America's ugly past of civil wars and state-backed violence in the 1970s and '80s. It is also a foreign policy headache for U.S. President Barack Obama, who has promised better relations with Latin America and an escape from the United States' past Cold War policies in the region.
Zelaya called a proposal presented by the de facto rulers last week a "joke."
"We are waiting for Mr. Micheletti to present a serious proposal. If they bring the same one presented on Friday we will take that to mean they are not interested in dialogue," Zelaya envoy Victor Meza told Reuters late on Sunday.
'CAT AND MOUSE'
While the de facto government says it comes to the table in good faith, some analysts say Micheletti is just biding for time, hoping to stay at the helm of the government until a new president is chosen in a Nov. 29 election.
"I think they are just playing a cat and mouse game. There is no solution in the direction they are going," Honduran political analyst Juan Ramon Martinez said.
Vilma Morales, a Micheletti aide, said on Monday the court will have to consider if there are pending criminal charges against Zelaya when deciding if he can return to the presidency.
"Some question whether there will be bias (in the court). In my opinion there won't," Morales told a local news channel.
Zelaya wants the Congress to decide on his return, which may mean he has rallied political support among lawmakers who voted for his ouster in June.
Some in Congress criticized Micheletti for issuing the decree curbing civil liberties and human rights groups accuse his government of major abuses, including deaths [ID:nN12151282].
Obama's administration has threatened it will not recognize the winner of the elections if democracy is not first restored, but Micheletti's team hopes the United States and other foreign governments will buckle if the vote moves forward.
Foreign donors have pulled millions of dollars of aid from Honduras since the coup, but Zelaya wants tougher sanctions aimed at destabilizing Micheletti. (Additional reporting by Adriana Barrera and Frank Jack Daniel; Editing by Kieran Murray)
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