BEIJING, Aug 11 (Reuter) - China on Monday began an unprecedented dialogue on human rights with Australia, an apparent reward for Canberra's decision not to back a move in the United Nations to condemn Beijing for human rights abuses.

An eight-member delegation led by Bill Farmer, deputy secretary of Australia's Department of Foreign Affairs and Trade, was attending the four-day meeting in Beijing, Australian sources familiar with the talks said.

The dialogue was the first such bilateral forum by the communist giant and the Australian side was entering the meeting with modest expectations, the sources said.

"We're not expecting breakthroughs.

" It is a hard issue to deal with," said one source who asked not to be identified. "We don't have unrealistic expectations.

"What we want to do is establish a climate or a framework in which the issues can be talked about in a straightforward manner without confrontation," the source said.

China rejects international criticism of its policies on dissent as interference in its internal affairs, arguing that its citizens' right to the bare necessities of life is more important than political rights.

Beijing came under fire at the U.N. Human Rights Commission meeting in Geneva in March and April but escaped formal censure after Australia, France and Germany refused to back a motion critical of China put forward by Denmark.

Western governments have slammed China for a wide-ranging crackdown on dissent in 1996 that saw almost the entire Chinese pro-democracy movement jailed, intimidated into silence or driven into exile.

The conservative Australian government says a dialogue is the only way it can achieve an improvement in China's human rights performance.

"A while ago the Chinese didn't want to talk about these issues. They say that's none of your business. Now they are prepared to talk with us," another source said.

"It's a good thing. It's a two-way street," said the source who spoke on condition of anonymity.

The Australian side hoped the dialogue would produce an agreement to hold another round of talks in Australia next year, the sources said.

The dialogue would cover a range of issues, including the treatment of religious believers in the restive Himalayan region of Tibet and the plight of certain jailed Chinese dissidents, the sources said.

The Australian delegation arrived at the weekend and would meet officials of China's foreign and justice ministries, the legal affairs committee of parliament, the Supreme People's Court and the Supreme People's Procuratorate before returning home on Friday, the sources said.

The dialogue follows a recent warming in relations, which chilled last year over a series of diplomatic and security spats, with Beijing expressing concern over Australia's closer military ties with the United States.

Chinese Vice-Premier and economic tsar Zhu Rongji visited Australia in May, saying he had cancelled a European tour and opted to visit Australia as a reward to Canberra for abandoning the motion in the U.N. to censure China for its human rights.