MANILA, June 20 (Reuters) - A Philippine priest named at the weekend as the chief government negotiator for talks with the country's largest rebel group quit on Wednesday after guerrilla leaders opposed his appointment.

Father Eliseo Mercado said the opposition to his appointment by the Moro Islamic Liberation Front (MILF) meant he could not take up the post.

"If the party you are negotiating with has an objection, then maybe it is common sense on my part to withdraw," Mercado told Manila-based Catholic radio station dzRV.

Mercado, a missionary of the Oblates of Mary Immaculate, was named on Saturday as Manila's chief negotiator with the MILF. He replaced Silvestre Afable, a cabinet-rank officer who resigned amid reports that he was not getting full support from President Gloria Macapagal Arroyo and the powerful military.

But Mercado's appointment was criticised by the rebels, who said he was an outsider and lacked the authority to commit the government to a political deal to end rebellion in the south of the mainly Roman Catholic nation.

Still, on Tuesday, Mercado told Reuters he was confident he would have the power to negotiate with the MILF.

"I was promised by government that I have full authority, a cabinet rank, access to the president and others," he said in an interview. "That's the assurance I was given."

There was no sign why he changed his mind overnight, but newspaper reports said several senior government and military officials had also opposed his appointment.

Presidential adviser Jesus Dureza, who announced Mercado's appointment on Saturday, said the priest had informed him of his inability to take the job.

He said Mercado would prefer to continue to support the peace process "in some other non-partisan capacity".

There was no word on a replacement and on whether a scheduled resumption of peace talks next month would take place.

Since 1997, the government has been talking with the MILF to end conflict that has killed more than 120,000 people and displaced 2 million.

Talks over the size and wealth of the proposed Muslim homeland have been stalled since September 2006, although backroom negotiations have continued.

Mohaqher Iqbal, the rebels' chief negotiator, told Reuters the MILF had written a letter to the Malaysian government, which is brokering the peace talks, expressing "deep reservation" over the appointment of Mercado.

"This is not a Muslim-Christian confrontation, so we don't want a Roman Catholic priest to be negotiating with the Islamic rebels," he said.

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