(Adds Liberals backing motion, paragraphs 2, 8-9)

By Randall Palmer

OTTAWA, Feb 21 (Reuters) - Canada's minority Conservative government, bowing to a key opposition demand, said on Thursday its military mission in southern Afghanistan will end in 2011 and would not be extended.

The compromise with the main opposition Liberal Party, which said the new motion was "not a deal-breaker" and signaled its intention to back it, eliminated the chance of an election over the issue.

"While reiterating our commitment to the U.N. mandate on Afghanistan, it affirms that our commitment is not open-ended," Prime Minister Stephen Harper told the Conference of Defence Associations.

The 2,500-strong mission in the violent southern Kandahar region is currently due to end in February 2009. The government had initially proposed extending this to 2011, at which time the mission would be reviewed.

The Liberals had said this was unacceptable and demanded a fixed end date of February 2011. An amended motion presented by the government on Thursday committed Canada to notifying NATO that its presence in Kandahar would end as of July 2011 and troops would be redeployed from the south by December 2011.

The House of Commons is due to debate the motion next Monday and Tuesday and hold a confidence vote on it in March.

"It seems clear that we have reached a consensus which can be submitted to Parliament for ratification," Harper said in French.

The Liberals said the government had met most of their demands, especially a clear end to the mission rather than a renewable commitment.

"We may ask for clarifications here and there, but by and large, we're happy with it since they've accepted 95 percent of our wording and they've accepted our ... principles," said Leslie Swartman, a spokeswoman for Liberal leader Stephane Dion.

Harper's government could still fall over its Feb. 26 budget, but the Liberals, lagging in the polls, seem to have little appetite for triggering a sudden election.

The Conservatives won the January 2006 election, ending more than 12 years of Liberal rule.

Harper made it clear last month that Canada would extend the mission to 2011 only if NATO committed 1,000 more troops to the Kandahar region and Ottawa obtained military helicopters and unmanned aerial surveillance vehicles.

"In recent days I have contacted the leaders of major NATO countries and advised them that Canada's continued role in the region is contingent on greater support from our allies," said Harper, who is unhappy at what he sees as the reluctance of some member nations to commit troops to southern Afghanistan.

The topic of troops in Afghanistan is set to dominate a summit of NATO leaders in early April.

So far, 78 Canadian soldiers have died in Afghanistan and polls show the public is split on the mission there.

Harper, whose government has pumped billions of dollars into the armed forces since 2006, also said Ottawa would boost the automatic annual increase in defense spending to 2 percent from 1.5 percent starting in the 2011-12 financial year. (Additional reporting by David Ljunggren; Editing by Rob Wilson)

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