By Jan Lopatka

PRAGUE, June 10 (Reuters) - Czech Prime Minister Mirek Topolanek's drive to cut welfare spending and improve public services has been stalled by political turmoil and he now faces a struggle to survive until 2010 elections.

Investors and credit rating agencies praise his efforts to cut the budget deficit, free up hospital beds and crack down on one of Europe's worst workplace absenteeism rates despite lacking a majority in parliament.

But rifts in the centre-right coalition and defeats at the hands of rebellious backbenchers have put the brake on efforts to overhaul state healthcare and public services.

The central European EU member country has seen economic growth of over 6 percent in the past three years, filling the government coffers. But an overhaul of the fiscal, health and pension systems is needed to ensure a long-term budget balance that would allow euro adoption in the next decade.

Coalition parties also look headed for clashes over nuclear power, Europe's Lisbon reform treaty, and plans for a U.S. missile defence radar -- issues that have potential international repercussions.

The centre-right government has agreed to host the radar, but has so far failed to secure support in parliament for ratifying the deal in the face of growing public opposition.

Topolanek said in a newspaper interview on Saturday his government was shaken and may collapse by the end of the year after potentially punishing regional elections.

"As we get closer to the autumn election the more the tension will rise, and there will be no power to push unpopular things through," said Vladimira Dvorakova, a political scientist at the University of Economics.

"The situation is more serious than just a week ago."

The coalition has depended on two independents to augment its 100 seats to a majority in the 200-seat lower house, but has been increasingly undermined by rebel deputies who have voted with the opposition.

Topolanek's former finance minister-turned-foe Vlastimil Tlusty said last week he would not follow the government line if he does not like it. Two deputies for the coalition Green party said they may quit.

The reforms, which have brought lower taxes for the rich and fees to see a doctor or get a drug prescription, have eroded the government's support in the traditionally egalitarian country.

The country's biggest union group called a one-hour general strike for June 24, an extremely rare labour protest. A poll last month showed Topolanek's Civic Democrats are trailing the main leftist opposition party by 11.5 points.

RISK OF LENGTHY CRISIS

Analysts said if the government falls, a lengthy political crisis would follow. Calling early election is very difficult under Czech law, and building a new cabinet would be very tough given the fine balance of power in parliament.

But the most likely outcome is for the parties to keep the coalition together, even if they ditch the reforms.

"There is no visible alternative," Dvorakova said.

Financial markets have ignored the political rows, and the crown currency, backed by strong exports, hit a new high to the euro of 24.500 on Tuesday.

But the political stalemate could see the country drifting effectively rudderless towards the 2010 election.

The situation resembles Hungary, where health reforms stalled after voters struck down doctor fees in a referendum. The government gave up, lost a coalition ally, and now is limping toward the 2010 election.

The Czech rifts threaten to block the sale of health insurers, plans to raise the retirement age to 65 from 63, and increasing the role of savings in funding pensions.

"All the projects in foreign and tax policy, social reforms which had been planned for this spring, have not been presented yet. If they are not completed by July, they cannot be done this year," said Charles University analyst Jan Kubacek.

Any delay is risky, because the country will hold the rotating European Union presidency in the first half of 2009, diverting the government's attention, and after that the 2010 election is likely to freeze any will to take unpopular steps.

"What is done this year will be, I am afraid, the last things that can be done by the end of the term," said Kubacek. (Editing by Keith Weir)

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