OTTAWA (Reuters) - Prospects for an early Canadian election appeared to fade on Monday after the opposition New Democrats cautiously welcomed government proposals for new jobless benefits.
That sets the scene for the unusual possibility that the left-wing New Democrats might keep the minority Conservative government in power, even though the two parties differ on virtually everything.
"The announcement (on benefits) today appears to be a step in the right direction. There is much more that needs to be done as well," party leader Jack Layton told reporters.
"But make no mistake about it, we have no intention of giving this government a blank check," he said.
The Conservative government, elected last October, needs the backing of at least one of the three opposition parties in Parliament to stay in power.
The Liberals, Canada's largest opposition party, have played that role so far. But the party said earlier this month it would try to bring the government as early as possible, raising the prospect of a November election if other opposition parties back a Liberal non-confidence motion.
The Conservatives' proposal would make jobless benefits more generous, potentially meeting a key demand from the NDP, which has been a strong critic of Prime Minister Stephen Harper.
Aides said Layton would give a definitive reaction in the next two days. If the NDP backs the government, the party would then vote against the Liberal non-confidence motion.
Harper has continually dismissed the idea of an early election, and he says Parliament should focus on the economy as Canada tries to spend its way out of recession.
"Canada does not need an election -- an election is not in this country's best interests," he told Parliament.
Opinion polls offer no guarantee either that the Liberals would win a minority government or that the Conservatives would increase the number of seats they hold in Parliament.
The polls also suggest the New Democrats would lose some of the seats they picked up in the last election, which might explain their willingness to avoid another vote.
"There is a huge difference between supporting a government without getting anything in return and making Parliament work," Layton told the party's legislators in Ottawa.
Most political observers believe that if the Conservatives survive the coming weeks, there will not be an election until next May or June at the earliest.
There will also be a confidence vote this Friday, on what officials said was a routine motion linked to budget spending.
The Bloc Quebecois, the third opposition party, has said it will vote for the measure, as long as it contained no poison pills. This would ensure the government's survival.
The next obvious chance to bring down the government will be over its budget in late February or early March 2010, around the time of the Winter Olympics in Vancouver. Legislators say that if Canada does well at the Games, it is likely to boost the government's popularity.
Layton also said the NDP would soon unveil proposals on pension reform, help for the aged, climate change and protecting Canadians from "gouging" by credit card companies.
But it remains unclear if he can strike a long-term deal with the Conservatives, given that Harper refers dismissively to the New Democrats as "socialists".
The New Democrats could pay in the next election for backing Harper -- a change the Liberals would likely try to use to show that a vote for their left-leaning rivals was wasted.
Editing by Janet Guttsman