(Recasts, adds government soldier quote, Kofi Annan comments)

By Finbarr O'Reilly

RWINDI, Congo, Nov 17 (Reuters) - Well-armed Tutsi rebels in eastern Congo have pushed back demoralised army troops and advanced north despite their leader's pledge to support a ceasefire and peace talks, witnesses said on Monday.

Government troops abandoned their position late on Sunday at Rwindi, 130 km (80 miles) north of Goma in Democratic Republic of Congo's North Kivu province, after a battle with the rebels involving small arms and heavier weapons. U.N. peacekeeping troops at Rwindi stayed in their base during the fighting.

Tutsi rebels loyal to renegade General Laurent Nkunda have continued to push north and extend the territory under their control, despite the commitment to a ceasefire and peace talks made by Nkunda on Sunday to a U.N. envoy.

The peace initiative by former Nigerian president Olusegun Obasanjo, named special envoy by U.N. Secretary-General Ban Ki-moon, is aimed at ending weeks of renewed fighting that has displaced a quarter of a million civilians.

Obasanjo also met Congolese President Joseph Kabila and Rwandan President Paul Kagame at the weekend in an effort to stop the east Congo conflict from escalating into a repeat of a 1998-2003 Congo war, in which several million people died.

A U.N. peacekeeper at Rwindi, who declined to be identified, told Reuters that Nkunda's National Congress for the Defence of the People (CNDP) forces had started advancing against government troops on Sunday, the day Nkunda met Obasanjo.

"By morning (on Monday), the CNDP was here," he said.

The road into Rwindi was littered with army boots and blankets. At the town, a ranger post for the Virunga National Park, rebel fighters manned checkpoints abandoned by the army.

To the north, sporadic gunshots rang out that peacekeepers said were probably fired by hungry soldiers poaching animals.

Local residents said they wanted the conflict to stop.

"There were more than 100 bombs that fell last night. What kind of ceasefire is that?" said Clement Augustin Kasabuni, 33.

A U.N. official said the retreating government soldiers had destroyed equipment left behind in Rwindi including ammunition and a rocket launcher. The rebels have been collecting large amounts of military hardware abandoned by the weak and chaotic Congolese army.

LOW ARMY MORALE

Morale among government soldiers at nearby Kanyabayonga, a town on the province's main north-south road, seemed very low.

"All our generals are corrupt politicians and rebels," said a Congolese army sergeant-major, who asked not to be named.

"We don't have any food or any ammunition, and we have only small arms and they (the rebels) have heavy weapons."

Nkunda is demanding direct talks with Kabila on Congo's future. Kabila's government says it will only negotiate if Nkunda agrees to return to a January peace deal that he abandoned on the grounds it was one-sided.

U.N. chief Ban has asked the Security Council to send 3,000 extra troops to reinforce the 17,000-strong U.N. peacekeeping mission in Congo, the biggest of its kind in the world.

Criticised for lack of action by Congolese civilians and by aid workers, the U.N. Congo force commanders say they cannot hope to protect all civilians in a country the size of Western Europe with few roads and an abundance of armed groups.

Former U.N. secretary-general Kofi Annan appealed for a rapid reaction force to be sent quickly to east Congo, along the lines of the U.N.-approved, French-led European "Artemis" force that successfully intervened against marauding militias in east Congo's northeasterly Ituri province in 2003.

"Are we prepared to turn away again? If not, where is the surge of troops ... to give mediators time to do their work and help stabilise the situation?" Annan told a forum in Paris.

Obasanjo has held talks with Congo's neighbours Rwanda and Angola to seek their help in ending the conflict, which has its roots in Rwanda's 1994 genocide, when Hutu militias killed about 800,000 Tutsis and moderate Hutus before fleeing into Congo.

Nkunda says his rebellion is protecting east Congo's Tutsi minority and accuses Kabila of using a Rwandan Hutu rebel group, the FDLR, which includes perpetrators of the genocide, to fight with the army against him.

For his part, the Congolese president accuses neighbouring Rwanda of supporting Nkunda's rebellion.

Rwandan President Kagame reiterated his denial of this on Monday. "It's either exaggerated or distorted to imply Rwanda is holding a switch that will switch off Nkunda or that Rwanda initially switched him on," he told a news conference in Kigali.

Obasanjo said on Sunday Nkunda had agreed to open a humanitarian corridor to send aid to displaced refugees and to take part in peace talks in Nairobi at an unspecified date.

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