"I don't think we are homophobic," Lee told the Foreign Correspondents Association of Singapore, adding that he agreed with his predecessor Goh Chok Tong that "homosexuals are people like you and me".

"But there are some segments of Singaporeans who vehemently disagree with that (attitude), and we have to be aware of that," he said when asked about his policies on gays and if Singapore might be ready for a gay cabinet minister.

"Our job as a government is to create an environment and manage an environment in which there's maximum space for each person, each view, for each person to live his own life without impinging on other people," he said.

Goh, who stepped down in August 2004 in favour of Lee and remains in the cabinet as Senior Minister, had said in 2003 that gays would be allowed in the civil service, which was seen as a social milestone in Singapore.

Some gay activists say Singapore has stepped backwards under Lee.

Police in August banned an annual gay and lesbian party, called The Nation, which drew international revellers the past four years, prompting organisers to move it to Thailand.

Lee, 53, said staging gay pride parades may not cause a stir in Sydney, London or San Francisco, but could cause an uproar in the city-state.

"I'm not sure that I want to do that in Singapore because I think it would be offensive to a large number of Singaporeans and it will be very divisive," he said, noting that some Singaporeans still see homosexuality as a sin.

Lee said that while the government needs to accommodate gay interests, it also has to ensure their activities do not cause a backlash from the larger society "which will lead to polarisation and animosity".

Turning to local politics, Lee stressed that a western-style democratic system with various contending political parties would not work for Singapore, which has been ruled by the People's Action Party over the past 40 years.

"I do not see a western model which you described in an idealised form as being the target that we want to aim for. We do not see this as being a model which will work well in Singapore," he said.

Lee said Singapore's brand of parliamentary democracy has worked well for the country, which emerged from a sleepy trading port in the 1960s to become one of Asia's wealthiest nations.

"There are free elections and the electorate has given their confidence overwhelmingly to one party -- for a good reason because it is the party which has delivered," said the son of independence leader Lee Kuan Yew.

Singapore's opposition plays a marginal role in politics, its leaders hounded by lawsuits and their activities curbed by strict laws against protest rallies and lack of access to the mainstream media.

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