The 30,000-strong United Wa State Army (UWSA), Burma's largest ceasefire group, has been training civilians from various townships in the Wa region of Shan state since December last year, military analyst Aung Kyaw Zaw told DVB.
The programme, which includes the training of women in the use of small weapons, is due to end on 20 January.
The UWSA, which controls vast swathes of Shan territory, has a loyal following among ethnic Shan in the region. It also plays a leading role in Burma's opium market, which is the second biggest in the world behind Afghanistan's.
Tension has been high between the UWSA and the Burmese army following pressure from the government on ceasefire groups to transform into border guard forces and come under the direct control of Naypyidaw.
"The locals are being trained as militias," Aung Kyaw Zaw said. "The training is being provided by UWSA brigades in different areas. Among 11 townships in Mong Maw district [in northern Shan state], Aike Chin township has the largest number of trainees with about 700 people."
Demands made by the Wa army in response to the junta's requests, such as the expansion of Wa territory and a pledge that only ethnic Wa soldiers will be in the border guard unit, have been rejected by the junta.
Following the rejection, the Wa refused a meeting between their leader, Bao Yuxaing, and government officials, citing health reasons.
Last month however the UWSA drew up a nine-point proposal in response to the government, in which they tabled the idea of having a senior army official act the role of deputy military commander in two Wa-controlled regions.
The majority of Burma's 18 ceasefire groups have rejected the government's demands, which appear to be an attempt to strengthen its support base prior to elections this year.
Observers have warned that clashes similar to the Kokang conflict in September last year could break out if the pressure on ceasefire groups, many of whom hold only tenuous truces with the government, does not abate.