* Red Sea port is supply line for millions facing famine
* Calm reported after lingering skirmishes on outskirts
* International monitors to be deployed in Hodeidah
* Framework for full peace talks to be tackled in January (Adds Saudi foreign minister)
HODEIDAH, Yemen, Dec 14 (Reuters) - Yemenis dared to hope on Friday that a ceasefire agreed in the contested port city of Hodeidah might bring a permanent end to fighting that has driven many from their homes and into an existential struggle for food and medical care.
Hodeidah became the focus of Yemen's nearly four-year-old war this year after the Saudi-led coalition launched an offensive to seize the city, a Red Sea port and supply line for millions of people at risk of famine, from Iranian-aligned Houthi forces that also hold the capital Sanaa.
At talks in Sweden on Thursday, the Houthis and the coalition-backed government of President Abd-Rabbu Mansour Hadi agreed to stop fighting in Hodeidah and withdraw forces.
It was a breakthrough for U.N.-led efforts to end the war that has killed tens of thousands of people and caused the world's worst humanitarian crisis.
Akram Ateeq, 31, used to support his mother, wife and child by selling fish near Hodeidah harbour but has been unable to work for six months due to battles on the outskirts of the city.
"We are happy there will be a halt to the war. We have no jobs and are living on aid. We need help," he told Reuters.
Residents reported lingering skirmishes on the northern and eastern edges of the city on Thursday night but said Hodeidah was calm by Friday morning. Streets were largely empty at the start of the weekend.
"We are happy about the ceasefire but are worried that the fighters will not abide by it," said teacher Iman Azzi, in her 50s. "The war has destroyed us. We want to live."
Youssef Abdo Ali, 44, has been struggling to feed his nine children since seeking refuge in Hodeidah. "The war has wiped out everything," he said.
U.N. envoy Martin Griffiths, who secured Thursday's deal after a week of peace talks in Sweden, the first in over two years, said both parties would withdraw "within days" from the port, a major entry point for most of Yemen's commercial imports and aid supplies, and later from the city as a whole.
International monitors are to be deployed and armed forces would pull back completely within 21 days.
The warring parties are due to discuss a political framework for peace negotiations at a second round of talks in January.
"BUMPY" ROAD AHEAD
The Sunni Muslim alliance led by Saudi Arabia and the United Arab Emirates (UAE) intervened in the war in 2015 to restore Hadi's government after it was ousted from Sanaa by the Houthis.
The Gulf states have come under pressure from Western allies to end the conflict, in which thousands of civilians have been killed in Saudi-led air strikes, rights groups say.
"The road ahead remains bumpy but the significant breakthrough will make peace possible," UAE Minister of State for Foreign Affairs Anwar Gargash tweeted on Friday.
Saudi Foreign Minister Adel al-Jubeir later tweeted that Saudi Defence Minister Crown Prince Mohammed bin Salman had exerted "great personal efforts" to ensure the success of the Sweden talks, without providing details.
The war is seen as a broader proxy conflict between Iran and its major Middle East rival Saudi Arabia.
The UAE, which controls military bases in the coastal towns of al-Khokha and al-Mokha, has massed thousands of Yemeni forces on the outskirts of Hodeidah, the Houthis' main supply line.
Coalition warplanes have backed fighters battling Houthis in the eastern 7th July district of Hodeidah and near a university 4 km (2.5 miles) from the port and a few blocks from al-Thawra hospital, the main medical facility on Yemen's western coast.
The ceasefire has wider implications for millions facing possible starvation, as the port supplies two-thirds of the population of the impoverished country of 29 million people.
Herve Verhoosel, senior spokesman for the World Food Programme, told a U.N. briefing in Geneva that the truce should enable a sustained flow of food, fuel and aid and prevent further price spikes.
He said it would renew access to Red Sea Mills, which stores 51,000 tonnes of WFP wheat stock but has been cut off since September due to fighting.
U.S. aid group Mercy Corps cautioned that the truce was only the first step on an uncertain road to peace.
"The measure of the agreement will be taken in action on the ground, not words in a conference room," Mercy Corps Yemen director Abdikadir Mohamud said. (Reporting by Mohammed Ghobari in Aden and Reuters team in Hodeidah, Maher Chmaytelli in Dubai, Stephanie Nebehay in Geneva and Stephen Kalin in Riyadh Writing by Ghaida Ghantous Editing by Mark Heinrich)
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