IN Burma's sun-drenched largest city, Yangon, street vendors are doing a brisk trade in Aung San Suu Kyi souvenirs.

T-shirts, posters and key rings emblazoned with her image, and the logo of her National League for Democracy (NLD) party, have only recently been permitted by the ruling military regime. Local Burmese, and foreign tourists now holidaying here, are snapping them up.

"We do not trust the government, but we trust Aung San Suu Kyi," says a Yangon taxi driver, without prompting, as we thread our way along busy roads. "She is braver and stronger than all of us – I could not do what the Lady has done". Also known as 'Daw (sister) Suu', Aung San Suu Kyi is revered across this sprawl of more than four and a half million people, many of whom survive on just two dollars a day. Bolstered by recent reforms, and the NLD's landslide victory in by-elections early this month, ordinary Burmese are now more willing to criticise their regime after years of brutal repression.

In Yangon it is tempting to think that the NLD and its charismatic 'Lady' are winning the battle to steer the Burmese government towards Western-style democracy. But in the extreme north of this vast country, the Burmese military is intensifying a long-standing and vicious ethnic conflict against its own people.

Most Western tourists to Burma head no further north than the city of Mandalay in the centre of the country, or the nearby temple-strewn plains of Bagan. It takes at least another 24 hours, on a bone-jarring local diesel train, to reach the small city of Myitkyina in the far north. Myitkyina is the capital of Kachin state. A temperate riverside city near the border with southern China, it looks, and feels, very remote from tropical Yangon. Arriving here on a cold, windy night during an early monsoon rainstorm in April, it could almost be Scotland. But for the last 10 months the Burmese military has been waging war against the Kachins.

In June last year a longstanding ceasefire agreement between the Kachins and the government broke down, after fighters from the Kachin Independence Army (KIA) refused to be conscripted into the Burmese border guard. Battles between the two sides became increasingly brutal at the end of the year. Anxious to appease international criticism, Burma's president, U Thein Sein, ordered the troops to halt their offensive in December. But the fighting has continued, in apparent disregard of his orders. The KIA says at least 100 of its fighters have been killed. The Burmese military, however, has released no casualty figures. Rounds of peace negotiations between the government and the KIA political wing – the Kachin Independence Organisation (KIO) – have been held in China, but have stalled. The KIO says it does not seek independence from Burma, but wants equal treatment for its people enshrined in Burmese law. Its proposals have so far been rejected.

As the fighting has intensified, farmers and peasant families from Kachin villages and settlements scattered between Myitkyina and the Chinese border have been driven from their homes by the Burmese military. Entire villages have been torched. No-one knows how many civilians have been killed or maimed in these attacks, but up to 60,000 Kachins have fled their homes and land. The majority are sheltering in dozens of makeshift camps across northern Kachin and neighbouring Shan state. These lie in both KIA and government controlled areas.

The Kachins are Christians, mainly Baptists and Catholics, and many of the camps have been set up by churches and local Christian organisations.

In Jan Mi Baptist Church camp, just outside Myitkyina, 600 displaced Kachins are sheltering in half a dozen traditional bamboo longhouses. Each family, often eight or more adults and children, has a confined living space between paper-thin walls, and most have few possessions. They live on basic rations distributed by a local religious organisation. Some of them fled their villages before the Burmese military could get to them: others have survived horrific attacks.

Ling Sao, a farmer from a small village in the hills north of Myitkyina tells his story with the blank expression and monotone voice of a man still in deep shock.

In January this year he was working on his smallholding with his three young sons, just outside his village, when they were attacked by the Burmese military.

"My children managed to hide, but the soldiers kidnapped me," he says. "They tied me up for 10 days and beat me many times. They accused me of being in the KIA. I was terrified for my wife and children. I didn't know if they were dead or alive".

The soldiers then forced him to porter weapons and guide them to other Kachin villages. "When we came to the villages they were already empty. The people had all run away. The soldiers said if they saw anyone they would shoot them on sight."

Ling Sao endured weeks of beatings and forced labour at the hands of the military. When I ask what he saw during this time, he shakes his head. "It was terrible: just empty villages and dead people and animals." After two months, the military let him go and he returned to his village in search of his wife and sons. "But all that was left in my village was a dead body. It was a friend of mine. I found him lying on the ground with his eyes gouged out.

The Burmese military have a longstanding reputation for brutality. During this offensive, they've been accused of killing and torturing unarmed civilians and raping Kachin women. The residents of these camps say they are too frightened to return to their homes. And many have no homes to return to.

The KIA has also been accused of human rights abuses, including using children as soldiers. The number of KIA fighters is impossible to verify – estimates run from 20,000-50,000. But they are no match for the Burmese military, which has half a million troops at its disposal.

Ling Sao made his way to Myitkyina, still searching for his family. With the help of staff at this camp, he found his wife, who sits silent by his side. Together they spent weeks hoping, and praying that they would find their sons. Just a few days before I spoke to him, Ling Sao finally heard that the three boys are in another camp, near the border, and the staff are trying to co-ordinate a reunion. This is the only moment he breaks a smile.

Many of the camps in and around Myitkyina are managed by a local NGO, the Kachin Baptist Convention (KBC). Sengli is one of the co-ordinators.

"The humanitarian situation [in Kachin state] is getting worse," he says. "There is no food assistance for people sheltering in areas that are not controlled by the Burmese government.

Basically, Kachins sheltering in areas controlled by the KIA are going hungry. This includes more than 1000 people sleeping in tents around the town of Laiza, on the Chinese border, where the Kachin Independence Organisation is based. Sengli says the KBC is working with local UN staff to try and assist them.

"We are a politically neutral organisation, and will work with both sides," he states. "Our priority is just to get urgent humanitarian assistance to all the displaced Kachins."

The monsoons are about to break in Burma, unleashing months of heavy rain, which could also have disastrous health consequences.

THE KIO insists the Kachin situation demands not just a cessation of arms, but a viable political solution based on legal equality. The Burmese regime's violent repression of ethnic minorities, especially their political and cultural rights, has created some of the longest running ethnic wars in the world. Ceasefires with some of the other ethnic groups within Burma have only been signed in the last eight months. The Kachin are now the only Burmese minority in armed conflict with the government. Nevertheless, the EU has just suspended sanctions against Burma, while China has invested heavily here for years. Massive new projects will see northern Kachin state used as a conduit for piping oil, gas and hydro electricity to southern China, through some of the very areas Kachin villagers have fled. This region is also rich in natural resources: gold, jade and teak forests. The Kachins's demands for their rights could not only undermine the regime's relationship with other ethnic groups, but also the new reformist image U Thein Sein and his government are so eager to capitalise on.

The plight of the Kachin also underlines the Herculean task ahead for Aung San Suu Kyi and the NLD, in terms of uniting this diverse country.

Suu Kyi visited Kachin state in March, and is said to be eager to revive the historic Panglong Agreement, signed by her father, Aung San, in 1947. The deal enshrines the rights of Burma's major minority groups, but has never been adhered to by the military regime.

The recent by-elections that sparked such euphoria in Yangon and southern Burma were cancelled in Kachin state by the government, for "security reasons". The current political optimism on the streets of Yangon has not reached Myitkyina, where the streets feel uneasy, and there are no NLD T shirts for sale.

At a local bar overlooking the river, young Kachins buy me a beer and share their opinions. "We love Aung San Suu Kyi. She has done more for our country than anyone. But her priority is not the minority issue," one says bluntly. "We don't want independence; but we want to be safe in our own homes."

His friend adds: "Democracy is for Yangon, not Kachin state."

Outside Burma, human rights organisations welcome the political reforms inside Burma, and insist the rights of Burma's minorities have to be addressed.

"Any meaningful claim by the [Burmese] authorities to political reform in Burma must involve putting an end to crimes against its own people, particularly Burma's ethnic minorities," says Shabnum Mustapha, programme director for Amnesty International in Scotland. "Among other violations, arbitrary arrests, imprisonment, torture, and extra judicial executions of activists, have been documented by Amnesty. Burma must not only uphold its claim of political reform, but improve its human rights record, including ceasing widespread and systematic violations against [its] ethnic minority civilians."

Until now, fighting between the KIA and the Burmese military has raged in the countryside some miles outside Myitkyina. The city itself has been safe. But just a few days ago a bomb exploded inside the city. Sengli of KBC tells me over the telephone that it was not a big explosion, and no-one was injured. But no-one knows who planted it, and now, he says, the whole city is nervous.