(Adds U.S. State Department comments, paragraphs 15-16)

By Barry Moody

ADDIS ABABA, Feb 3 (Reuters) - Britain expressed scepticism on Tuesday about Zimbabwe's new coalition government but pledged support because of the suffering of the population, indicating a shift in the West's stance on the crisis.

The comments from Mark Malloch Brown followed a similar marked shift of tone from Washington since opposition leader Morgan Tsvangirai agreed to enter a power sharing government with President Robert Mugabe last week.

The new Obama administration has dropped its public demand for Mugabe to step down and the European Union also welcomed the deal, although Western powers say they are not ready to lift sanctions on the president and his entourage until they see concrete evidence of reform.

Malloch Brown said he had been convinced by African leaders at a summit in the Ethiopian capital that the new government must be given a chance.

"I think the one message I've got loud and clear from this summit, and I'm very sympathetic to it, is we've got to give this a go, we've got to all do our best to support it, because the needs of Zimbabweans are so overwhelming," he told BBC radio in an interview from Addis Ababa.

"We're sceptical but we've got to try and help this work," he said, saying Britain and others would be generous donors if the agreement succeeded.

Mugabe used a session of the summit on the global economic crisis on Tuesday to rail against Western powers, which he accused of blocking support to Zimbabwe from the IMF and World Bank, whose programmes have been suspended because of arrears.

"Due to some illegal, unilateral, extraterritorial legislation by some powerful members of the same institutions, the enjoyment of our rights of membership have been strangulated," Mugabe told his fellow African leaders.

"We believe that these illegal actions are not only unjustified and cruel but they have also led to the needless suffering and foreign-induced polarisation of the people of Zimbabwe."

NEW GOVERNMENT

The new government, with Tsvangirai as prime minister, is due to be sworn in by Feb. 13, although the opposition MDC accused Mugabe's ZANU-PF on Tuesday of backtracking on the agreement by delaying discussions on contentious issues.

Former colonial power Britain has been one of the fiercest critics of Mugabe, accusing him of destroying the economy of the formerly prosperous country and using militias to violently suppress opposition. The veteran Zimbabwean leader blames the crisis on Western sanctions.

Zimbabwe suffers the world's highest inflation rate, officially put at 231 million percent, and acute shortages of food, fuel and foreign exchange.

A cholera epidemic has killed 3,229 people and infected 62,909 others -- Africa's deadliest outbreak in 15 years.

Malloch Brown's remarks suggested African leaders have persuaded Western powers to take a softer line over Zimbabwe while the power-sharing government starts work.

In Washington, State Department spokesman Robert Wood said actions by Mugabe will determine the success or failure of the unity government.

"The U.S. will only consider new development assistance and easing of targeted sanctions when we have seen evidence of true power sharing as well as inclusive and effective governance," Wood said.

The toning down of U.S. rhetoric was a sharp change from the previous Bush administration, which had intensified calls for Mugabe, in power since 1980, to quit.

Analysts say Western rhetoric against Mugabe is often counter-productive in Africa, feeding his allegations that Britain and other powers are plotting to overthrow him.

Malloch Brown made clear, however, that Britain would not drop sanctions against Mugabe and his entourage until it had seen whether they were making a real commitment to power-sharing, echoing U.S. and European views.

"We really hope this time it is different for the sake of the people of Zimbabwe and we will work as though it is different, but we are not going to completely put away our stick, if you like, until we're convinced it is."

Britain, Washington and the EU are holding out promises of a major aid package to Zimbabwe but only after there is evidence of substantial political and economic reform.

"At this stage we need proof on the ground ...We have to see the implementation of the agreement before we can talk about possible next steps," one EU diplomat told Reuters in Brussels. (Additional reporting by Daniel Wallis, Marius Bosch in Johannesburg, Ingrid Melander in Brussels and Sue Pleming in Washington; Editing by Diana Abdallah)

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