Myanmar's suspension of a controversial mega-dam project is the latest glimmer of change from a regime reaching out to the West at the expense of ties with traditional ally China, experts say.

The surprise decision to halt construction of the Chinese-backed hydropower project for several years at least -- risking the anger of Beijing -- was a rare concession to public opinion in the authoritarian nation.

It was also the latest conciliatory gesture by the new nominally civilian government towards its critics, including Western nations who impose sanctions on the regime, the suppressed pro-democracy movement and armed ethnic rebels.

"In recent years Burma has been seen as a client state of China," said Gareth Price, senior research fellow at the Chatham House think-tank in London, using the country's former name.

"Maybe they feel after this political process that they have gone through that there's a need to distance themselves from China," he added. "So they think they are going to get some new friends and sanctions will be lifted."

In March Myanmar's junta announced it was disbanding following the first election in two decades, held in November, which handed power to a new government headed by President Thein Sein, a former general and junta premier.

Initially derided by critics as a frontman for the military, Thein Sein has surprised many by promising a range of political and economic reforms, although sceptics argue nothing has yet been done that could not be easily reversed.

In announcing the suspension of the $3.6 billion Myitsone Dam hydropower project in northern Kachin state in late September in the capital Naypyidaw, Thein Sein said the government had a duty to "respect the will of the people".

The project has long been opposed by residents in the area, where fighting has flared up recently between government troops and the Kachin Independence Army (KIA), one of several armed ethnic militias around the country.

Resistance to the dam had also been growing among pro-democracy and environmental activists in the main city of Yangon, with small protests testing the new government's proclaimed tolerance of freedom of expression.

The halt "is a significant signal that Naypyidaw intends to send to multiple audiences: Beijing, Washington, the KIA and the local public," said Maung Zarni, a researcher and activist at the London School of Economics.

For the people of Kachin, the Myitsone dam has come to symbolise the struggles they have faced for decades as a marginalised ethnic group in the repressed nation under almost half a century of military rule.

So the suspension of the project "holds out a hand to the Kachin people, who are very doubtful as they fear a possible renewal of the civil war," said Renaud Egreteau, a Myanmar expert at the University of Hong Kong.

It also reflects "the strength of feeling that Myitsone provokes at the heart of Myanmar's civil society," he added.

The United States praised the suspension, describing it as a "significant and positive step" that suggested the leadership was listening to its people.

President Barack Obama's administration, which has pursued both diplomatic engagement and continued sanctions against Myanmar, has welcomed signs of political change in the Southeast Asian nation.

Myanmar appears eager to engage with Washington and see sanctions lifted, even if its relations with China suffer as a result.

"There is absolutely no love lost between Naypyidaw and Beijing and many in Naypyidaw believe that it is only Western sanctions that have pushed them into an unnatural dependence on China," said Thant Myint-U, author of "Where China Meets India: Burma and the New Crossroads of Asia".

The US administration has in particular welcomed the Myanmar leadership's dialogue with democracy icon and Nobel peace laureate Aung San Suu Kyi, who met the president for the first time in August.

Suu Kyi for her part has said she believes Thein Sein genuinely wants to push through reforms, but cautioned it was too soon to say whether he would succeed.

Thein Sein is widely thought to face resistance from regime hardliners, while Western governments are calling for Myanmar to release its estimated 2,000 political prisoners to show it is genuine about wanting to reform.

Local activists have also called for the suspension of another controversial project to transport gas by pipeline from Myanmar's western coast to China, which appears to have been taken by surprise by the halting of the dam project.

China's official Xinhua news agency quoted Lu Qizhou, president of China Power Investment Corp, the energy giant behind the dam project, as saying he was "totally astonished" by the move, which he learned of through media reports.

Sean Turnell, an expert at Australia's Macquarie University, said Beijing was also likely to have been surprised by the suspension.

"They have got used to a compliant leadership in Burma that has allowed more or less unfettered Chinese access to energy and resource extraction --- regardless of the environmental and human costs of it," he said.