By Daniel Dickson and Johan Sennero
STOCKHOLM (Reuters) - Sweden's minority, centre-left government looked close to collapse on Tuesday after just two months in office when a far-right party announced it would vote against the 2015 budget, effectively dooming it to defeat.
The anti-immigration Sweden Democrat party, which holds the balance of power in parliament, said it would support instead an alternative budget proposed by the centre-right Alliance opposition bloc, leaving the government isolated.
Prime Minister Stefan Lofven invited Alliance leaders for immediate talks to resolve the crisis and urged them to live up to election promises not to work with the Sweden Democrats, who want to cut the number of asylum seekers by 90 percent.
"I am ready to cooperate across the party divide," Lofven told reporters.
However, the leaders of the Moderate, Centre, Christian Democrat and Liberal parties, which make up the Alliance, did not immediately respond to his olive branch and prospects for compromise looked bleak.
The biggest opposition party, the Moderates, said earlier that the Alliance would not withdraw its budget. Economic policy spokeswoman Anna Kinberg Batra said it was not the opposition's job "to help the government to remain in power".
Parliament is due to vote on the budget on Wednesday.
Acting Sweden Democrat leader Mattias Karlsson said his party was flexing its muscles to force a reversal of Sweden's generous stance on immigration.
"If the Alliance doesn't change its policies (on immigration), we would try to bring down a government of those parties too," Karlsson said.
Costs for asylum seekers including housing, language lessons and welfare allowances totalled 1.5 percent of the country's 2013 budget, with Sweden the biggest per-capita recipient of asylum seekers and refugees last year, according to the OECD.
That humanitarian generosity however has fed the rise of the far-right, and the Sweden Democrats doubled their support in the September election, taking 13 percent of the vote and becoming the third largest party in parliament.
Mainstream parties have shunned them and the budget gives them a rare opportunity to show their political strength.
"They have a mandate from their constituents to stir up trouble," said Henrik Ekengren Oscarsson, professor in political science at Gothenburg University.
Lofven, head of a coalition that ties together the Social Democrats and Greens, could yet avoid being Sweden's shortest-serving prime minister since the 1930s.
He could send the budget back to committee for amendments to try to win backing from the centre-right. He could also resign and try to put together a new government with sufficient backing to get a budget approved.
A last resort would be to call a snap election -- something that has not happened since 1958 -- risking a period of political and market uncertainty.
(Reporting by Johan Sennero and Daniel Dickson; Writing by Simon Johnson; Editing by Niklas Pollard, Robin Pomeroy and Crispian Balmer)
