NAYPYIDAW, Myanmar - Aung San Suu Kyi on Sunday addressed controversy over the use of the word "Rohingya" to describe the persecuted and stateless Muslim minority, warning that use of the term risked inflaming communal tensions in Myanmar.

Suu Kyi said her new government was determined to address deep hatreds in western Rakhine State, where tens of thousands of Rohingya are confined to squalid displacement camps after waves of deadly unrest with local Buddhists in 2012. Buddhist nationalists have staged protests across the country against using the term Rohingya.

They label the group "Bengalis", casting Myanmar's more than one million Rohingya as illegal immigrants from Bangladesh. "The Rakhine Buddhists object to the term 'Rohingya' just as much as the Muslims object to the term 'Bengali'," Suu Kyi said during a press conference with US Secretary of State John Kerry in the capital Naypyidaw.

The words carry "all kinds of political and emotional implications which are unacceptable to the opposite parties," she added.

Suu Kyi, who has faced criticism internationally for not speaking up for the Rohingya, pledged to work towards a situation where the communities "live peacefully and securely outside the camps". "That is why we say that we need the space to build up trust and security within the community", Suu Kyi added.

The new government was trying to tiptoe through the deeply controversial subject to find a solution that is acceptable for all, she explained.

Myanmar's Rohingya population are denied citizenship even though many can trace their roots in the country back generations.

Kerry praised his counterpart for explaining her approach to the incendiary issue. "At the same time we all understand as a matter of fact that there is a group here in Myanmar that calls itself Rohingya," he added.

The US says it backs the rights of all ethnic groups to identify as they wish.

In recent weeks Washington has come under pressure from hardline Buddhists after the US embassy used the term "Rohingya" to refer to the persecuted Muslim minority. Suu Kyi asked to be given "enough space" to address the plight of her country's Rohingya Muslim population, as visiting US Secretary of State John Kerry pressed the Nobel peace laureate to promote respect for human rights.

Some 125,000 Rohingya in Myanmar are displaced and face severe travel restrictions in camps since fighting erupted in Rakhine State between the country's Buddhists and Muslims in 2012. Thousands have fled persecution and poverty in an exodus by boat.

The United States has long supported Suu Kyi's role in championing democratic change in Myanmar, but was surprised this month when she suggested to the new US ambassador Scot Marciel to refrain from using the term 'Rohingya' for the persecuted Muslim minority.

The Rohingya, most of whom live in apartheid-like conditions, are seen by many Myanmar Buddhists as illegal immigrants from Bangladesh and referred to by many as Bengalis.

"Emotive terms make it very difficult for us to find a peaceful and sensible resolution to our problems," Suu Kyi told reporters at a joint news conference with Kerry in Naypyitaw. "All that we are asking is that people should be aware of the difficulties we are facing and to give us enough space to solve all our problems."

Kerry said he had discussed the Rohingya issue with Suu Kyi during their meeting, describing the issue as "very sensitive" and "divisive," in Myanmar.

"I know it arouses strong passions here," Kerry said. "At the same time, we all understand, as a matter of fact, that there is a group here in Myanmar that calls itself Rohingya," said Kerry, adding that the United States used that term.

"What's critical to focus on is solving the problem; what's critical to focus on is improving the situation on the ground to promote development, promote respect for human rights, and to benefit all of those who live in Rakhine and throughout Myanmar," he added.

There is widespread hostility towards Rohingya Muslims in the Buddhist-majority country, including among some within Suu Kyi's party and its supporters.

Taking up the cause of the beleaguered minority would carry a political cost for Suu Kyi, who took on the newly created role of state counsellor in April following the first-democratically elected government in some five decades.

Last month hundreds of demonstrators protested in front of the US Embassy in Yangon in objection to the use of the term Rohingya in a statement issued by the embassy. Ambassador Marciel has said he would keep using the term Rohingya because it is Washington's policy to do so.

"What we want to do is avoid any terms that just add fuel to the fire," Suu Kyi said in response to a question on her comments about the Rohingya.

In a clear reference to the United States, she said her "well-wishers" should be helpful as she tries to work through the issue of the Rohingya. "While we are trying to find that solution, we would like our friends to be helpful in this," she said, "That is very difficult, I'm not denying that, and if our well-wishers are not ready to cooperate with us, it will make our task that much more difficult."

Kerry was on a brief stop in the capital Naypyitaw before he joins President Barack Obama in Vietnam on Monday.

Kerry offered US support for Myanmar's new government, but said there were still "important hurdles" for the country to overcome in its transition to full democracy from military rule.

Kerry met later to discuss further political reforms with the commander in chief of the armed forces, Senior General Min Aung Hlaing at the sprawling defence services complex in the capital.

The military still controls 25 percent of seats in the country's parliament and oversees three power ministries of defence, home affairs and border affairs. Min Aung Hlaing has repeatedly said that the military will step back from the political arena when there is peace in the country.

Last week, the Obama administration further eased economic and financial sanctions against Myanmar. Kerry said a further easing of measures would not occur under the current constitution, which bars Suu Kyi from becoming president.