NAIROBI, June 26 (Reuters) - Kenyan President William Ruto on Wednesday withdrew planned tax hikes, bowing to pressure from protesters who had stormed parliament, launched demonstrations across the country and threatened more action this week.

The move will be seen as a major victory for a week-old, youth-led protest movement that grew from online condemnations of tax rises into mass rallies demanding a political overhaul, in the most serious crisis of Ruto's two-year-old presidency.

But some demonstrators said on social media that despite Ruto's climbdown they would go ahead with a rally planned for Thursday, with many reiterating demands he resign.

Ruto announced he would not sign a finance bill including the tax increases, a day after clashes between police and protesters at the assembly and nationwide left at least 23 people dead and scores wounded, according to medics.

"Listening keenly to the people of Kenya who have said loudly that they want nothing to do with this finance bill 2024, I concede. And therefore, I will not sign the 2024 finance bill, and it shall subsequently be withdrawn," he said in a televised address with lawmakers, some clapping, seated behind him.

Vice President Rigathi Gachagua asked young people to call off the protests to avoid any further loss of life and destruction of property, and blamed the intelligence services for giving the government poor advice.

"There would have been no mayhem, but they slept on the job," Gachagua said in a speech, calling on the head of the National Intelligence Service to resign.

Protesters were defiant, repeating calls for Ruto to step down and vowing further action in the streets.

Boniface Mwangi, a prominent social justice activist involved in the protests, called for a "1-million-people march".

"The arrogance is gone, but the lies are still there," he said on social media platform X. "Yesterday they unleashed goons and police to kill peaceful protesters. That will not stop us."

Other members of the protest movement continued to post on social media using the hashtag #tupatanethursday, or "see you on Thursday" in a mix of Swahili and English.

Kalonzo Musyoka, a senior opposition leader and former vice president, wrote on X that pulling the bill did not go far enough and he called on Ruto to quit. "Many Kenyans died. Many Kenyans suffered serious injuries. It is currently beyond the Finance Bill, 2024," Musyoka said.

The International Monetary Fund said on Wednesday that it was closely monitoring the situation and was deeply concerned about the unrest.

"Our main goal in supporting Kenya is to help it overcome the difficult economic challenges it faces and improve its economic prospects and the well-being of its people," the IMF said in a statement.

The bill will return to parliament with the recommendation that all its clauses be deleted, Ruto wrote in a document addressed to the speaker of the national assembly.

Ruto said he would now start a dialogue with Kenyan youth, without going into details, and work on austerity measures - beginning with cuts to the budget of the presidency - to help tackle the fiscal deficit.

He said the loss of life on Tuesday was "very unfortunate". Kenyan police have not responded to requests for comment about the violence.

Photo from The Japan News