* Commission led by former UN chief Annan arrives amid protest
* Parliament discussing whether to exclude foreigners in panel
* Foreigners cannot understand history of the area: opposition

Hundreds in Myanmar rallied on Tuesday against an advisory commission led by former UN chief Kofi Annan to find solutions to the conflict between the country's Buddhists and minority Rohingya Muslims, which has cast a pall over democratic reforms.

The plight of the Rohingya has raised questions about Myanmar leader Aung San Suu Kyi's commitment to human rights and represents a politically sensitive issue for her National League for Democracy, which won a landslide election victory last year.

Local residents and Buddhist monks joined the protest overseen by dozens of police, despite rain in the northwestern Rakhine State, challenging what they perceived as ‘foreigners' biased intervention’ from the nine-member panel.

Jeers and chants denouncing the panel intensified upon the arrival of Annan's plane. The crowd soon followed the convoy into town, where Annan delivered a speech and met with members of both the Rohingya and Buddhist Rakhine communities during his two-day visit to Sittwe, the capital of Rakhine state.

‘We are here to help provide ideas and advice,’ Annan told local officials and leaders from the Buddhist Rakhine community over the sound of demonstrators outside a government building.

‘We are also aware of resistance, fears and doubts that have prevailed again and again,’ he said.

Myanmar's lower house of parliament was on Tuesday discussing whether foreigners should be excluded from the commission, but the chances of such an outcome are low.

‘I don't want to see foreigners involved in this commission. I want to see a commission involving people of the Rakhine nationality,’ Kyaw Zin Wai, a 52-year-old carpenter told Reuters, adding that the two ethnic Rakhine commission members were not ‘representative’ of people in the state.

The commission, made up of six Myanmar citizens and three foreigners, is on a initial two-day visit to meet local communities. It will visit camps for stateless Muslims on Wednesday, where people live in cramped and poorly maintained huts. It hopes to present its findings in the next few months.

More than 100 people were killed and some neighborhoods were razed to the ground as local ethnic Rakhine Buddhists clashed with Rohingya Muslims across the state in 2012.

Some 125,000 people are still displaced, the vast majority of them Rohingya, who are prevented from moving freely, have their access to basic services restricted and are mostly denied citizenship in Myanmar. Many have fled by sea in rickety boats.

Suu Kyi, who is barred from the presidency by the junta-drafted constitution but leads the country as state counselor and foreign minister, formed the commission last month to find solutions to the issue.

She plans to visit the United States this month, where she is thought to be seeking further sanctions relief for her country but is likely to face questions over her efforts to improve conditions for the Rohingya.

The protest was called by some leaders in the state's powerful Arakan National Party (ANP), which has criticised the commission, insisting that foreigners cannot understand the history of the area.

‘This country has its own sovereignty, so we will not accept foreign interference in local affairs,’ said Aung Than Wai, secretary of ANP's executive committee.

Annan told fellow commissioners and Suu Kyi at the panel's first meeting in Yangon on Monday that he planned to approach the region's long-running conflict with ‘rigorous impartiality’ and would listen to all sides of the conflict.

‘Dialogue will be the order of the day,’ Annan said.