Myanmar's Aung San Suu Kyi picked former UN chief Kofi Annan to lead a commission to stop human rights abuses in Rakhine State, where violence between Buddhists and minority Rohingya Muslims has cast a pall over democratic reforms.

More than 100 people were killed in violence in the northwestern state in 2012, and some 125,000 Rohingya Muslims, who are stateless, took refuge in camps where their movements are severely restricted.

Thousands have fled persecution and poverty in an exodus by boat to neighbouring South and Southeast Asian countries.

"The Myanmar government wants to find a sustainable solution on the complicated issues in Rakhine State, that's why it has formed an advisory commission," the government said in a statement released by Suu Kyi's office.

Suu Kyi is barred from the presidency by a junta-drafted constitution, but runs Myanmar as state counsellor and foreign minister.

The plight of Myanmar's Muslims has raised questions about the democracy champion's commitment to human rights and represents a politically sensitive issue for her after the end of decades of repressive military rule exposed communal tensions.

The Rakhine commission would include nine independent members, including six Myanmar citizens and three foreigners, the government said.

Annan, in a statement issued by his foundation in Geneva, said he welcomed the opportunity to support efforts to promote peace, reconciliation and development in Rakhine State.

The commission would meet for the first time on Sept. 5 in Yangon, he said, adding: "I look forward to listening to the leaders and people of Rakhine and to working with the state and central authorities to ensure a more secure and prosperous future for all."

Annan was Ban Ki-moon's predecessor as U.N. secretary-general from 1997-2006. He shared the Nobel Peace Prize with the United Nations in 2001.

The commission, which includes members of the Muslim and ethnic Rakhine, mostly Buddhist, communities, would focus on conflict prevention, aid, reconciliation, human rights and development, the government said.

It will publish a report within a year of its formation.

Ban will visit Myanmar at the end of August. Suu Kyi will go to the United States in September, when she is expected to address the UN General Assembly.

While Suu Kyi has eased into her role as de facto head of state, former president Thein Sein, who oversaw the early stages of Myanmar's gradual reopening since 2011, has stepped down from the helm of his military-backed party that ran Myanmar until November elections.

Thein Sein, a retired general, was replaced as head of the Union Solidarity and Development Party (USDP) by Than Htay, also a retired general, who served as Thein Sein's minister in charge of energy and railways, the party said.

Suu Kyi's National League for Democracy trounced the USDP in the election last year.