Burma's military leader confirmed today that the country would hold its first elections in two decades this year but warned voters to make the "correct choices" when they go to the polls.

The long-awaited election would be Burma's first since 1990, when the main opposition party, led by the democracy leader, Aung San Suu Kyi, won by a landslide. The junta ignored the result.

In an occasionally cryptic message to mark the anniversary of Burma's independence from Britain in 1948, General Than Shwe said his seven-stage road map was the sole process in the country's transition to democracy.

"Plans are under way to hold elections in a systematic way this year," he said in the address, read out on television by a senior junta official. "In that regard, the entire people have to make correct choices." No date has been set for the election.

The 76-year-old general also warned people to "remain vigilant at all times against dangers posed by neocolonialists", in a reference to the US, Britain and other western nations critical of its record on human rights and treatment of political opponents.

Some will interpret the message as a warning not to vote for Aung San Suu Kyi's National League for Democracy. The NLD does not recognise the country's new military-authored constitution and has yet to decide whether to take part in the election.

Today, the NLD called on the junta, which seized power in 1962, to release the country's estimated 2,000 political prisoners and begin a dialogue with opposition parties. "All the stakeholders need to hold a dialogue with a sincere intention towards national reconciliation and for the benefit of the country and the people," said Khin Muang Swe, head of the party's central executive committee.

Opponents of the regime have dismissed the election as a sham, as the constitution guarantees a quarter of parliamentary seats for the military. The junta has yet to decide who can run for office, while representatives of Burma's ethnic minorities say they plan to boycott the vote.

Critics say the contest will tighten the regime's grip on power by producing a legislature dominated by the military and its civilian allies.

Aung San Suu Kyi is not expected to play any part in the vote after a court last year extended her house arrest for another 18 months to 2011. The Nobel peace laureate has spent 14 of the last 20 years in prison or under house arrest.

Burma's supreme court said last week it would review an appeal against her latest detention on 18 January.

Last week Gordon Brown wrote a personal letter to the detained leader in which he urged the regime to hold free and fair elections. "If the scheduled elections proceed under a rigged constitution, with opposition leaders excluded and no international oversight, the military leaders will be condemning Burma to more years of diplomatic isolation and economic stagnation," he said.

Barack Obama is pursuing a policy of engagement with the junta, dispatching a high-level mission to Burma in November to persuade the leadership to improve human rights.

While Washington today congratulated the Burmese people on 62 years of independence, it said it looked forward to the day when they could "exercise freely their universal human rights".

A state department spokesman, Ian Kelly, said the US "stands ready to take steps to improve bilateral relations based on reciprocal and meaningful efforts by the Burmese government to fulfil the Burmese people's democratic aspirations".