* Commanders of two militias ordered to be removed

* Killing of U.S. envoy embarrassed Tripoli leadership

* Benghazi residents pushed Islamist militia out of city

By Peter Graff and Ghaith Shennib

BENGHAZI, Libya, Sept 24 (Reuters) - Libya's government, seeking to assert its authority over private militias following the killing of U.S. diplomats in Benghazi, placed two powerful freelance units in the city under the command of full-time army officers on Monday.

Commanders of two units which have, with official sanction, been providing security since the overthrow of Muammar Gaddafi were ordered removed and the men of the February 17 Brigade and Rafallah al-Sahati militia put under army orders. A third unit, Libya's Shield, would also change leadership, an official said.

No comment was immediately available from Fawzi Bukatif, whose command of February 17 made him one of the most powerful men in oil-rich eastern Libya since the uprising against Gaddafi last year; nor was there a reaction from Ismail al-Salabi, who had led the heavily armed, pro-government Rafallah al-Sahati.

Uncertainties and disputes over authority have seen clashes and other violence among rival groups over the past year.

The killing of U.S. Ambassador Christopher Stevens and three other Americans on Sept. 11 - when the consulate was overrun by protesters and, some say, Islamist militants - embarrassed the interim Libyan leadership in the capital Tripoli and fuelled public anger at the continued presence on the streets of units from the revolutionary army whose loyalties are often unclear.

That popular fury after the death of a widely respected U.S. envoy who had played a role in supporting the anti-Gaddafi rebellion drove another militia, Islamist Ansar al-Sharia, out of Benghazi on Saturday. Two similar units in the eastern Islamist stronghold of Derna disbanded on Sunday.

The army, an institution that is being rebuilt as elected leaders work on establishing democracy, took advantage of that wave of popular sentiment to order unauthorised armed groups to leave public premises in Tripoli on Sunday - an operation which a military official said on Monday had been largely completed.

Army Colonel Salah Buhlaiga said two other colonels would replace Bukatif and Salabi: "I led the negotiations and we have done it successfully," he told Reuters. "We have taken command of those two big militias."

In the office of the chief-of-staff of the armed forces, spokesman Ali al-Shaikhy named the two new commanders as Colonel Emrajaa al-Mashaity at February 17 and Colonel Salahadeen Bin Omran at Rafallah al-Sahati. Together, these units can count on many hundreds of armed men in Benghazi, varyingly equipped but most recognisable by machinegun-mounted pick-up trucks.

Shaikhy said a new commander would also be named in the next few days for Libya's Shield, another paramilitary force first formed in the war against Gaddafi and which has taken on civil defence functions around the country's second city.

CHALLENGE

U.S. and Libyan investigators are still trying to work out what exactly happened at the Benghazi consulate but what is clear is that the militia units charged with keeping order failed to prevent an attack which followed protests against the U.S.-made video which has incensed Muslim opinion worldwide.

The militias are the clearest challenge to the authority of a central government forced to co-opt many of them to provide security. Official drives to either disband them or bring them fully under the control of the government have come and gone in the past, with little effect. But the growing frustration of the Libyan public may be tipping the balance at street level.

On Monday, London-based Amnesty International again accused militias of abusing human rights and called for their removal:

"We hear of individuals being abducted by armed militias, tortured including to death, driven out of their homes and killed or injured during armed confrontations. Such practices should have vanished with the end of the al-Gaddafi era, but they are ongoing in a climate of impunity," the group said.

The anarchic violence associated with the militias was on show in dramatic fashion on Friday when protesters who had pushed Ansar al-Sharia out of Benghazi moved to another compound believing that it, too, harboured anti-government Islamists.

It turned out to be the base of the pro-government Rafallah al-Sahati. Its fighters opened fire in an attempt to protect a large weapons store it had been asked to guard. Eleven people were killed and more than 60 injured before the militia left.

Six of the dead were bodyguards of a colonel in the regular Libyan army who went missing on Friday, suggesting a kidnapping that may have been the work of a militia group. (Additional reporting by Ali Shuaib and Marie-Louise Gumuchian in Tripoli; Writing by Alastair Macdonald; editing by David Stamp)