By Anis Ahmed

DHAKA, Oct 31 (Reuters) Bangladesh President Iajuddin Ahmed sacked or transferred 27 senior bureaucrats on his first day as head of an interim government after opposition parties set him a deadline to prove his neutrality.

''The president has begun to act towards fulfilling the demands,'' a senior government official said today.

Iajuddin was sworn in on Sunday evening as chief adviser of the caretaker authority to supervise January elections in the impoverished South Asian country of 140 million.

But the main opposition party, the Awami League, and its allies have asked him to demonstrate by November 3 that he is neutral and can be trusted for the job.

The caretaker authority replaced Prime Minister Begum Khaleda Zia, whose five-year mandate ended last Friday.

Violent protests over who should lead the three-month administration killed at least 25 people and injured hundreds over the weekend.

Iajuddin's administration ordered security to be tightened to avert further violence -- which analysts said could derail the election process -- and officials said around 500 people had been detained in the past 24 hours alone.

Awami chief Sheikh Hasina handed Iajuddin a list of demands yesterday, including reforms to the election commission and a pruning of the civil and police administration.

Hasina, a former prime minister, said Khaleda's government had installed ''trusted and loyal'' officials in many key posts before quitting, so they could manipulate her return to power.

The government official said that in addition to the personnel changes, Iajuddin ordered the removal of Khaleda's photographs from state offices, another of Hasina's demands.

But there was no word on whether or when he would meet the opposition's main demand: the removal of Chief Election Commissioner M.A. Aziz and his deputies, whom Hasina accuses of a pro-Bangladesh Nationalist Party (BNP) bias.

Bangladesh introduced the caretaker system in 1991 after military president Hossain Mohammad Ershad was toppled through a people's uprising led jointly by Khaleda and Hasina, who have, however, remained implacable foes since then.

The system, designed to prevent ruling parties from rigging polls, has worked generally well in three elections. The Awami League now wants the system to be reformed to make it more efficient and reliable, but Khaleda's BNP is reluctant.

Life returned to near-normal today after a 14-party alliance led by Hasina called off a three-day blockade of highways. Commuters streamed into the capital, Dhaka, offices reopened and the main port, Chittagong, was working again.

REUTERS AB HT1150