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Zimbabwe's Prime Minister Morgan Tsvangirai has said his MDC party has "disengaged" from the unity government over the treatment of his senior aide.
He said all outstanding issues of a power-sharing deal had to be dealt with before the MDC would work with Zanu-PF.
Senior MDC member Roy Bennett was later released on bail after two days in prison, but Mr Tsvangarai's spokesman insisted the boycott would continue.
Mr Bennett was detained for alleged arms and terrorism offences.
Mr Tsvangirai said the detention showed Zanu-PF was an "unreliable" partner.
"It has brought home the reality that as a movement we have an unreliable and unrepentant partner in the transitional government," AFP quotes him as saying.
Mr Mugabe and Mr Tsvangirai agreed to share power in February after disputed elections last year marred by violence.
But since then their parties have failed to agree on appointees for provincial governors, the central bank governor and the attorney general.
The Movement for Democratic Change also accuses Zanu-PF of persecuting its legislators and activists.
Zimbabwean journalist Brian Hungwe told the BBC Mr Tsvangirai said the MDC was not yet pulling out of the coalition government and was open to talks to break the impasse.
But the prime minister also accused Zanu-PF of beginning to set up militia bases in the countryside, and militarising state institutions ahead of future elections.
'Persecuted'
Mr Tsvangirai said the MDC was officially pulling out of cabinet and council of ministers meetings as well as routine Monday meetings between the leaders of the three parties in the national unity government.
"Until confidence has been restored, we can't continue to pretend that everything is well," AP news agency quotes Mr Tsvangirai as saying.
MDC spokesman Nelson Chamisa told the BBC that despite Mr Bennett's release, the MDC would not co-operate with Zanu-PF until other outstanding issues are resolved.
The BBC's Jonah Fisher in South Africa says the announcement is a sign of deal under intense stress - but in itself it may not make much difference to the operation of Zimbabwe's government.
He says the MDC has been ignored over some key decisions.
MDC ministers will however continue to hold their positions - and try to exercise their powers.
Mr Bennett, who has been nominated as deputy minister for agriculture, is due to stand trial on 19 October on charges of terrorism, insurgency, sabotage and banditry. If convicted he could face a life sentence in jail.
"Roy Bennett is not being prosecuted, he is being persecuted," Mr Tsvangirai said.
Mr Bennett was initially arrested and jailed in February, on the day ministers in the coalition government were sworn in.
He was released on bail in March before a judge ordered that he return to prison on Wednesday.
"In my view the applicant stands to lose more by absconding trial. He has foiled his previous record, therefore he is entitled to an order that he seeks," Justice Charles Hungwe said on Friday, announcing his bail release, AFP reports.
Mr Bennett, a white farmer whose land was seized under Mr Mugabe's land reform programme, fled to South Africa in 2006 saying he feared for his life, before returning to serve in the government.
Source: BBC
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