NAYPYIDAW: Myanmar pro-democracy activist Aung San Suu Kyi on Friday defended her party's controversial decision to accept donations from businessmen close to the former junta for its education fund.

The issue has highlighted the Nobel Peace laureate's dilemma of how closely to work with members of the former junta and their associates as the country also known as Burma emerges from almost half a century of military rule.

"Let them donate if they donate for good things," Suu Kyi, the opposition leader and lower house lawmaker, told AFP in the capital Naypyidaw when asked about the controversy.

"I don't understand why we cannot accept it. If it's illegal money, we won't accept it. If it's legal money, why not as it's for a good cause?"

The decision by Suu Kyi's National League for Democracy (NLD) to take money from "cronies" of the generals who ruled the country with an iron fist for decades has raised eyebrows given her long stand against the regime.

The donors at a party fundraising concert in December included Air Bagan and Asia Green Development Bank, both owned by prominent tycoon Tay Za, once described by the US Treasury as "a notorious regime henchman and arms dealer".

The NLD says it received a total of 500 million kyat ($580,000) from the event, making a profit of 320 million kyat after costs. Tay Za's companies donated a combined 70 million kyat.

"Tay Za and the cronies may have wanted to have some kind of political insurance, and as long as they are not trying to put political pressure on the NLD, there is no problem," said Trevor Wilson, a former Australian ambassador to Myanmar and visiting fellow at The Australian National University.

The family of another crony Kyaw Win, head of the media giant Skynet, paid nearly $50,000 for a jumper knitted by Suu Kyi at a charity auction last month.

The NLD says the money will be used to help provide free education for 10,000 students.

"Who will suffer if we ask them (the cronies) not to donate? Children must continue their education," said party spokesman and NLD lawmaker Ohn Kyaing.

"People can criticise. That's democracy."

Suu Kyi, who spent much of the past two decades under house arrest, is focused on her new political role following her election last year to a parliament dominated by the military and its political allies.

"What we have in Myanmar is a business elite that is supportive of the transition, prepared to see Aung San Suu Kyi assume power, willing to help their country on the path to development, and aware of the fact that its own public image needs to improve," said independent analyst Mael Raynaud.

"On Aung San Suu Kyi's part, I think it's a question of killing two birds with the same stone: showing the elite that she's ready to work with them and not treat them as enemies, while obviously filling the coffers of her party, which is a priority ahead of the 2015 elections," he added.

With the NLD setting its sights on those polls, the veteran activist has also been careful not to antagonise voters over sensitive issues such as the plight of the country's stateless Rohingya Muslims, disappointing some rights campaigners who want her to do more to help minority groups.

Decades of military rule starved the NLD of funds, and its small ramshackle offices in Yangon stand in stark contrast to the opulent headquarters of the ruling army-backed Union Solidarity and Democracy Party (USDP) in Naypyidaw.

"We have survived the past two decades with only our spirit of belief. It's important to continue with this spirit," said NLD lawmaker Min Thu. "Without using our own money, we couldn't have survived more than 20 years."