By Opheera McDoom

KHARTOUM, July 8 (Reuters) - Southern Sudanese rebel leader John Garang was set to return to Khartoum for the first time in more than two decades on Friday to mark the start of a new era of government in war-torn Sudan.

People’s Liberation Movement (SPLM) leader John Garang is welcomed by supporters in Rumbek, on June 11, 2004. (AFP).

Flags and pictures of Garang lined the streets of the capital to welcome the man who led a southern rebel movement against the Khartoum government for 21 years.

Under the terms of a peace deal agreed in January ending Africa’s longest civil war, Garang will become deputy to President Omar Hassan al-Bashir in an agreement meant to share power and wealth more equally throughout the country.

Garang was to be sworn in as first vice-president on Saturday in the presence of U.N. Secretary-General Kofi Annan, Arab League chief Amr Moussa and South African President Thabo Mbeki among other leaders.

"Politically this is a major breakthrough," Jan Pronk Sudan’s top U.N. envoy said.

Sudan’s southern civil war broadly pitted the Islamist government in Khartoum against the mostly Christian, animist south and claimed two million lives.

Under the peace deal Sudan’s current ruling party will have 52 percent of government and parliament and Garang’s movement 28 percent, with northern and southern opposition parties taking the remaining 20 percent.

Both northerners and southerners expressed delight about Garang coming to Khartoum.

"We need John Garang to come so we can be free," said 17-year old Michael Nyang, from the southern oil area of Bentiu who sought refuge in Khartoum seven years ago. "Wherever he goes I will follow," he said.

Northern businessman Hakim Moussa said he hoped the new government would usher in a period of investment and development.

The peace deal leaves unsettled however conflict in the western region of Darfur where tens of thousands of people have been killed and more than two million driven from their homes since rebels took up arms in early 2003.

The south is also to vote in a referendum within six years on secession from Khartoum. Although Garang’s position is for unity, many southerners want separation.

Pronk said Garang’s group had to negotiate which posts they would get in the new government, to be formed within 30 days of the ceremony on Saturday, then complete talks with southern militias who have not yet signed up to the deal.