* Arrests announced hours before hundreds protest
* Justice minister says lethal attacks planned
* Wade government gearing for Feb. 2012 election
(Recasts with protestors dispersed, colour)
By Diadie Ba
DAKAR, March 19 (Reuters) - Senegal's government said on Saturday it had thwarted a coup attempt, but critics dismissed talk of a plot and hundreds rallied in the capital to protest against President Abdoulaye Wade and poor living conditions.
The government said it had arrested suspected opposition-linked "commando" groups it said were planning lethal attacks around the capital but Wade's rivals accused him of diversionary tactics.
Demonstrators in the capital called for Wade not to stand for re-election and protested over issues ranging from rising living costs to power cuts.
Despite fears that the demonstration, in a nation that has been an island of stability in a turbulent region, might get out of hand, police dispersed the protesters by early afternoon.
"The state prosecutor has decided to nip in the bud a plot aimed at a coup d'etat by arresting a number of individuals identified as members of the plot," Justice Minister Cheikh Tidiane Sy said in a statement read on state television.
Tidiane Sy said authorities had learned that "commandos" linked to opposition groups were planning actions around the capital "to create panic and cause fatalities".
He said the suspects had targeted areas including the sprawling Sandaga market in downtown Dakar, a stretch of the corniche road running around the city centre and the working class Parcelles-Assainie district further north. He gave no further details.
"The government is afraid. They cannot resolve the country's problems so they invent plots that exist only in their heads," said Mamadou Lamine Diallo, head of the opposition Tekki party.
"HAD ENOUGH"
Later in the day, Wade's critics held a rally to mark the 11th anniversary of his presidency in Dakar's Independence Square, which organisers are dubbing "Tahrir Place", echoing the Tahrir Square epicentre of Egypt's uprising in Cairo last month.
Few expect the protest to gain the momentum being seen across the Middle East.
However it is being closely watched for how big a turnout the country's fragmented opposition can muster less than a year before Wade faces re-election in February 2012.
Some of the demonstrators burned and stamped on a photo of Wade shouting "Enough of Wade!" and "11 years is enough!".
"The system is rotten and we have had enough," said a protester called Mohamed. "There are no jobs for the youth, there is no water. There is no electricity. This is the beginning of the end. People must understand we've had enough."
"We don't want a coup d'etat. We don't want civil war but we want things to change," he added.
Opposition leaders accuse the octogenarian leader of bending constitutional rules to allow himself to stand for a third term, and suspect him of nurturing plans to engineer the succession of his son Karim Wade, charges he denies.
The mostly Muslim country is a rarity in the region in that it has a tradition of peaceful transition of power through the ballot box. Diplomats say high levels of corruption are eating into progress made by a country that has few natural resources.
(Writing by Mark John and David Lewis; Editing by Giles Elgood)
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