Greek coalition partners refuse to back troika demands

The Democratic Left and PASOK Socialist parties in the fragile three-way coalition have repeatedly insisted they will not back controversial plans to cut wages, reduce severance payments and scrap automatic wage hikes.

The allies in the past have signalled that they will ultimately sign up to the austerity package, vital for Athens to secure further aid, but that first they want concessions from lenders on the contested labour.

Leaders of both parties refused to change their stance after the latest round of talks with Prime Minister Antonis Samaras on Tuesday. This dashed hopes that had risen in recent days that the three leaders were close to sealing a deal on the austerity plan.

"I won't accept or vote for the labour reforms the troika demands, and neither will the deputies of the Democratic Left," that party's leader, Fotis Kouvelis, told reporters after the meeting of party leaders.

"This will be my stance, steady and unchanged, until the end ... Labour rights have already been crippled and these troika demands are nothing more than a plan to eliminate what's left."

Samaras's government has been holding parallel talks with coalition party leaders and the troika of European Commission, European Central Bank and International Monetary Fund lenders for months on a 11.5 billion euro package of spending cuts.

Hopes that a comprehensive deal was near grew after inspectors from the lenders left Athens last week saying the two sides had agreed on most reforms and austerity cuts needed to unlock the country's next tranche of aid.

Evangelos Venizelos, head of the PASOK Socialists, also reiterated his opposition to the reforms and urged Samaras to tell European partners that Greek society could not handle another round of painful cuts.

"We must not open new fronts like labour reforms that do not contribute anything to our fiscal targets," Venizelos said, adding that the country had already implemented a round of labour cuts earlier this year.

"It's unjustified and provocative to open this discussion again now."

Both Kouvelis and Venizelos are under pressure from their voter base to fight the proposed round of wage and pension cuts that many Greeks say has only impoverished them and plunged the economy into a tailspin. Greece is in its fifth year of recession with one in four Greeks out of a job.

Samaras, however, has insisted that the government has no choice but to push through the austerity cuts to secure aid and avoid bankruptcy next month.

(Reporting by Lefteris Papadimas, writing by Deepa Babington; editing by Stephen Nisbet)