ABIDJAN (Reuters) - Security forces loyal to Ivory Coast's Laurent Gbagbo launched a ground and airborne assault on Saturday to drive fighters backing his rival for the presidency out of a suburb of Abidjan, military officials said.

The attack was the first time helicopters had been deployed in support of an operation in the Abobo neighborhood, the site of fighting between the two sides over recent weeks.

Gbagbo has refused to step down after a November election which Alassane Ouattara won, according to U.N.-certified results. Ensuing violence has claimed several hundred lives and prompted close to half a million Ivorians to flee their homes.

Officials said several hundred soldiers, some armed with rocket-propelled grenades, were taking part in an operation backed by armoured vehicles and two reconnaissance helicopters.

"There was firing all over the place around the Plateau-Dokui (a local square) between 1300 and 1400," said Abobo resident Idrissa Diarrassouba. "A child was hit in the hand by a bullet and houses were struck by bullets."

The latest African Union effort to mediate in the crisis failed this week, adding to fears of a return to civil war in the world's top cocoa grower.

Allies of Gbagbo, who contends that the results of the poll were rigged, refused to accept an AU proposal for a national unity government led by Ouattara.

International sanctions such as a ban on European ships using Ivorian ports, together with the near-collapse of the local banking sector, mean supplies of Ivory Coast's cocoa to world markets have virtually dried up.

U.N. diplomats told Reuters on Friday there were discussions in the U.N. Security Council about setting up an escrow account for Ivory Coast's cocoa revenues that would allow Ouattara to benefit from funding once the trade restarted.

However, they said it was not clear whether the plan would win sufficient support within the Council, or was practicable given the closeness of many in the local cocoa sector to Gbagbo.

"Obviously this is what we're all looking at now -- how to get the cocoa money away from Gbagbo so that Ouattara's government can use it," a diplomat said.

"The one big problem with the idea is that the cocoa suppliers aren't necessarily supporting Ouattara."

(Additional reporting by Loucoumane Coulibaly in Abidjan and Louis Charbonneau at the United Nations; Writing by Mark John; Editing by Kevin Liffey)

Source: Reuters US Online Report World News