UPDATE 1-Iceland government scrapes through no confidence vote

Mon Mar 11, 2013 12:58pm EDT

* Parliament votes 32 to 29 against "no confidence" motion

* Protest vote against postponing constitutional reform

* Weak coalition faces election on April 27 (Adds result of vote, quotes)

REYKJAVIK, March 11 (Reuters) - Iceland's centre-left government survived a no-confidence vote in parliament on Monday, with a close vote underlining the weakness of the coalition as it faces an election next month.

Parliament voted 32 to 29 against the motion of no confidence with one lawmaker abstaining and one absent.

"I am very pleased with this outcome," Prime Minister Johanna Sigurdardottir told Reuters. "It is very valuable for the government to get this statement of trust as we still have to conclude some important matters."

The vote was called by an opposition member, Thor Saari, to protest against the government postponing constitutional reform, even though a referendum backed changes last year.

"I am disappointed," Saari said. "The nation wanted a new constitution and a small section of MPs has worked against that."

Icelanders voted in October for their constitution to be rewritten in the wake of the 2008 banking crisis, electing to take greater control of natural resources such as fish and geothermal energy.

Iceland is still dealing with the legacy of the collapse of its main banks. Economic recovery is still patchy and many voters remain angry with business leaders and politicians.

The coalition government of the Social Democrats and Left-Greens is trailing in opinion polls behind a centre-right party largely blamed for the island's troubles.

The vote was largely symbolic as parliament is due to end its current term this week before the April 27 election. (Reporting by Robert Robertson; Additional reporting and writing by Patrick Lannin in Stockholm; Editing by Louise Ireland)

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