By Andrew Cawthorne

CARACAS, Dec 15 (Reuters) - Venezuela's ruling Socialists inaugurated a grassroots assembly on Tuesday in the same building as the national legislature in a further effort to minimize impact of an opposition election win that has shaken the government.

In the election this month, the Democratic Unity coalition won control of the National Assembly for the first time in 16 years, with a two-thirds majority giving it wide powers to challenge President Nicolas Maduro's administration.

But Maduro said he will refuse to sign the opposition's first priority when the new legislature starts on Jan. 5: an amnesty law for jailed activists.

The outgoing Socialist-controlled National Assembly is also pushing new appointments to the Supreme Court where any conflict of powers will play out.

Adding to the mood of showdown, the government on Tuesday set up a new National Communal Parliament - to supervise the nation's patchwork of Socialist communities set up by late leader Hugo Chavez - in the same premises as the National Assembly.

Though seemingly more symbolic than a real undermining of the legislature's powers, the move nevertheless underlined the government's tough response to the opposition's recent election win that was largely a punishment vote against Maduro.

"It's a stumble from which we must get up stronger to keep promoting the Bolivarian Revolution!" outgoing National Assembly President Diosdado Cabello said of the Dec. 6 vote when he announced the new communal body's creation.

"The most important power is the power of the communes. There is no purer form of organization," he added, inviting the new body to sit in the National Assembly until Jan. 5.

In another slap in the opposition's face, the outgoing National Assembly swore into an important new job as public defender a judge, Susana Barreiros, who this year jailed opposition leader Leopoldo Lopez for nearly 14 years.

David Smilde, a Venezuela analyst at the Washington Office on Latin America, said that while the new communal body did seem part of a government strategy to soften the blow of losing the legislature, it was not a power grab.

"While the verbiage sounds like this is an attempt to replace the National Assembly, it looks like it will be a body that works at a lower level to distribute resources to communes and communal councils," he said.

"Of course the optics of this are alarming ... (but) I doubt it will seriously impede any functions of the National Assembly." (Editing by Cynthia Osterman)

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