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* Flaherty was named Conservative finance minister in 2006
* Saw Canadian economy through global financial crisis
* Outspoken critic of euro zone debt crisis, deficits
* Suffered from rare skin disease that limited activity
By Louise Egan and Cameron French
OTTAWA/TORONTO, April 10 (Reuters) - Jim Flaherty, who died on Thursday less than a month after stepping down from his post as Canada's finance minister, was a straight talker who shepherded the country's economy through a global financial crisis, and quit shortly after laying out a plan to reach his goal of balancing the government's budget.
Flaherty, 64, died peacefully in Ottawa, his family said in a statement.
He had been suffering from a rare skin disease when he resigned on March 18, but he denied at the time his decision had anything to do with his health.
The third longest serving finance minister in Canadian history, Flaherty assumed the job when Prime Minister Stephen Harper's Conservative Party took power in February 2006 after more than 12 years of Liberal rule.
Flaherty had said publicly he wanted to stay in his job until he eliminated the government's budget deficit, and in his budget in February he laid out a path to accomplish that goal by next year, ahead of an election scheduled for October 2015.
"In my time as finance minister, I am proud of the work I have done to help manage the deepest economic challenge to face Canada since the depression of the 1930s and ensure Canada emerged stronger and as a recognized economic leader on the international stage," Flaherty said in a written statement announcing his resignation.
Married and the father of grown-up triplet sons, Flaherty hailed from an Irish-Canadian, Catholic middle class family. He always wore a green tie for big announcements.
He was known for his quick wit and combative style in parliamentary debates, and he said he earned his toughness as a young hockey player.
As finance minister, he introduced broad tax cuts early in his term, priming the economic pump just before the start of the global credit crisis.
As the crisis deepened, he shrugged off his conservative instincts and introduced massive government stimulus measures to soften the blow on the economy, pushing the federal budget into deficit for the first time in 11 years and winning praise for helping the country bounce back from recession quickly.
On the world stage, Flaherty was a harsh critic of euro zone countries for their handling of the debt crisis and he persistently needled his Group of Seven counterparts to rein in their budgets.
His blunt criticism earned him a reputation among his European counterparts. European Union Economic and Monetary Affairs Commissioner Olli Rehn joked at one point that he had a "Flaherty Index" on the EU's prospects, based on how much grief he was getting from Flaherty at international meetings.
During his tenure, Flaherty also had to grapple with an overheated housing market and record-high personal debt levels. He tightened mortgage lending rules four times, and both problems have shown signs of easing.
He was not shy to take an unpopular stance, and in 2006 he roiled markets and received death threats after breaking an election campaign promise with a surprise decision to tax income trusts, an attractive type of investment vehicle.
He again defied market expectations last May when he named Stephen Poloz as the new Bank of Canada governor rather than giving the job to the man most thought would get it, the bank's second-in-command, Tiff Macklem. And in 2010, he hosted the G7 finance ministers in the Arctic town of Iqaluit, brushing off naysayers who fretted about severe weather and travel problems.
Flaherty had kept a lower profile since January 2013, when he revealed he was suffering from a rare autoimmune disease called bullous pemphigoid, which causes itching and painful blisters mostly on the abdomen, back, arms and legs. The medication he took to combat the disease had side effects such as weight gain and mood swings. (Editing by Jeffrey Hodgson; and Peter Galloway)