SANAA (AFP) - Shi'ite militia who have seized Yemen's capital announced Friday they had dissolved parliament and installed a "presidential council" to run the country in the face of a power vacuum.

The Huthi militia said it would set up a national council of 551 members to replace the legislature in the violence-wracked country, a key US ally in the fight against Al-Qaeda.

The heavily armed Huthis swept into Sanaa from their northern stronghold in September.

Last month, they seized the presidential palace and key government buildings in what authorities called a coup attempt.

That plunged the country deeper into crisis and prompted President Abedrabbo Mansour Hadi and Prime Minister Khalid Bahah to tender their resignations.

The Huthis' announcement came after a Wednesday deadline set by the militia for political parties to resolve the crisis passed with no agreement.

The five-member presidential council will form a transitional government to govern for two years, the Huthis announced in a "constitutional declaration" attended by tribal and military representatives as well as the outgoing interior and defence ministers.

Yemen has been riven by instability since the Arab Spring-inspired uprising that forced autocratic president Ali Abdullah Saleh from power in 2012.

Saleh has been accused of backing the Huthis, as has Shi'ite-dominated Iran.

The turmoil has raised fears that Yemen, which lies next to oil-rich Saudi Arabia, could become a failed state.