The fund, backed mainly by European donors and still being finalised, will renew a debate over whether aid groups can work effectively in a country led by one of the world's most secretive and repressive regimes.

"We hope governments can find a way to make this fund work, but we fear good intentions will be undermined by facts on the ground," said Mark Farmaner, spokesman for the Burma Campaign UK, which says aid must go "hand-in-glove" with a political strategy. "This regime is not interested in the welfare of its own people and sees aid as a potential source of income," he said.

Myanmar, under military rule since 1962, is largely spurned by the international community due to its human rights record and detention of democracy icon Aung San Suu Kyi.

It receives far less foreign aid - about $2.50 per capita - than regional neighbours Cambodia ($47), Vietnam ($33) and Laos ($63), and below the $14 average for low-income nations.

Coupled with the junta's paltry spending on health care - about three percent of the national budget compared to 40 percent for the military - Myanmar's 50 million people face some of the highest rates of deadly diseases in Asia.

Malaria, the biggest killer of children under five, claims 3,000 lives each year and drug resistant strains are spreading beyond Myanmar's borders.

Tuberculosis causes over 12,000 deaths a year but more worrying is the rapid growth of drug resistant TB blamed on poor medical services and sub-standard drugs.

An estimated 360,000 people are living with HIV, the virus that causes AIDS, and despite expanded prevention and care in recent years, UNAIDS says much more needs to be done.

TOUGH NEW RULES

The 3-D donors - including Australia, the Netherlands, Norway, Sweden, Britain and the European Commission-- are expected to pledge a combined $100 million over five years.

The fund will support the work of international and local NGOs, the U.N. and local government service providers, according to a briefing document circulating among aid groups in Myanmar.

Government ministries will have input in developing programmes and the Minister of Health will chair a coordinating body that will submit financing requests to the fund, it said.

But the fund will be overseen by an independent board and run day-to-day by a U.N.-appointed manager.

"The 3-D Fund has been carefully designed to ensure transparency, accountability and equity," the document said.

Critics say donors have yet to explain how 3-D will deal with the restrictions that forced the Global Fund to withdraw after spending only $11 million since 2004. The junta's new rules on foreign aid, formally announced in February, include travel permits and official escorts for field trips and tighter rules on transporting supplies and materials.

Funds must be deposited in a state-run bank and withdrawn in dollar-denominated foreign exchange certificates (FECs) - raising the potential for abuse, activists say.

"Big money projects inevitably attract interference as they are seen as a 'honey pot' to reward supporters of the regime," said Debbie Stothard of the democracy group ALTSEAN.

Instead of going along with the new rules, the aid community should use its collective leverage to get better terms, she said.

Foreign aid workers in Myanmar say the looming crisis is too large to ignore and there is no proof increased humanitarian assistance will weaken efforts to effect political change.

"A rights-based approach means you have an obligation to help people in need," said one aid worker who declined to be named.

U.N. agencies admit the operating environment is tougher in Myanmar, but work can still be done.

The World Food Programme, which complained last year about restrictions on its activities, says access for its staff and assessment teams has improved, but not for its partner NGOs.

"We continue to call upon the government to improve access for our partners as well," a WFP spokesman said.

UNAIDS coordinator Brian Williams said the Global Fund's withdrawal "fuelled a perception that you can't work" in Myanmar.

"But we and our partners deliver real services," he said, noting condom use tripled since 1999 and more than 2,500 patients get anti-retroviral drugs, a five-fold increase from 2004.

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