By Daniel Dickson and Johan Sennero
STOCKHOLM (Reuters) - Sweden's prime minister Stefan Lofven called a snap election for March on Wednesday, the Nordic country's first in more than half a century, after parliament rejected his centre-left minority government's first budget.
Lofven's coalition of Social Democrats and Greens, widely viewed as the weakest administration in decades, had been seen at risk of a defeat on the budget if the anti-immigration Sweden Democrats voted with the main opposition. Shunned by mainstream parties, the Sweden Democrats have held the balance of power in parliament since September's general election.
"This fundamentally redraws the political map," Lofven told a news conference, saying the new election would "let voters make a choice in the face of this new political landscape."
The far-right party has threatened to make Sweden effectively ungovernable unless the country imposes the kind of tough immigration policies adopted by neighbour Denmark. It wants Sweden to cut asylum seeker numbers by 90 percent.
Lofven blamed the four centre-right parties of the previous Alliance government for giving the Sweden Democrats an effective veto in SWEDISH (SWMA.ES)politics.
The crisis has shaken the image of a country often held up as a paragon of political and fiscal stability in contrast to crisis-hit Europe. But Sweden's low government debt and relatively robust growth are still likely to trump political uncertainty in the short term at least.
Analysts have warned a new vote would not necessarily produce a stable majority government of either centre-left or centre-right in light of the Sweden Democrats' hard-ball tactics.
September's poll reflected a split electorate, worried the cherished welfare state is failing after eight years of tax cuts under the previous centre-right government but also unconvinced by the Social Democrats' tax and spend promises.
The election's only winners were the Sweden Democrats, who doubled their vote to become the third largest party, echoing successes for the far right across Europe in recent elections.
In neighbouring Denmark and Finland, anti-immigration parties are now among the three most popular in some polls. In Norway, a rightist populist party is in the ruling coalition.
"The Alliance and the Social Democrats have brought this on themselves by not reaching a deal straight after the election," 75-year-old pensioner Stig-Ove said. "Now they have to find a way to bridge the political divide."
(Additional reporting by Johan Ahlander, Niklas Pollard, Simon Johnson and Helena Soderpalm; Writing by Simon Johnson; Editing by Catherine Evans)