(Corrects name of opposition leader paragraph 14)
* UK's Osborne sets new remit for Bank of England to help growth
* Government halves this year's growth forecast
LONDON, March 20 (Reuters) - British finance minister George Osborne turned to the Bank of England on Wednesday to do more to help spur the country's stagnant economy as he announced a halving of this year's growth forecast.
In an annual budget statement peppered with cat-calls from opposition politicians, Osborne said the central bank's inflation target would remain at 2 percent a year - but that that was not enough.
"As we've seen over the last five years, low and stable inflation is a necessary but not sufficient condition for prosperity," he told parliament.
Osborne said the country's economy was now expected to grow only 0.6 percent this year, half the rate predicted only three months ago, but he vowed to stick the course on austerity.
"It is taking longer than anyone hoped, but we must hold to the right track" he said.
Osborne said he was publishing a review of the Bank of England's mandate and said the central bank might need to use "unconventional monetary policy instruments" and give a clearer idea of what it will do in the future.
Such instruments in the past have included printing money to buy assets as a way of pumping cash into the moribund economy.
"The new remit explicitly tasks the MPC (Monetary Policy Committee) with setting out clearly the tradeoffs it has made in deciding how long it will be before inflation returns to target," he told parliament.
Such a change might make the Bank of England operate in a way similar to the U.S. Federal Reserve which has given increasingly explicit signs about how long it will continue to provide support to the U.S. economy.
Sterling briefly fell against the dollar and was weaker against the euro. British bond, or gilt, futures pared losses.
The BoE moves coincide with the arrival in July of a new governor of the Bank of England, Mark Carney, currently the head of the Bank of Canada. Carney has previously said he wanted a debate on the role of the BoE.
Osborne said Carney and the central bank's current governor Mervyn King both agreed with the new remit which is set by the UK finance minister each year.
A further review of the mandate would be carried out before the end of 2019.
Shortly before Osborne began speaking in parliament, some details of his market-sensitive statement were leaked on the Internet, prompting goading by opposition leader Ed Miliband.
The Labour opposition argues that the Conservative-led government has stuck too long to austerity, failing to provide needed growth.
Forecasts by Britain's budget watchdog showed growth was expected to pick up to 1.8 percent in 2014, after the 0.6 percent this year, Osborne said.
That was also lower than the watchdog's December forecast but Osborne said UK growth was expected to be stronger than in France and Germany in 2013 and next year, Osborne said.
He said Britain remained on track to eliminate its underlying budget deficit within five years. But a secondary target of stopping the rise of debt as a share of GDP would take a year longer than forecast in December, when it was also pushed back by a year.
Despite a slump in opinion polls, Osborne and Conservative Prime Minister David Cameron have stuck to their push to fix Britain's budget deficit and rising public debt, hoping for a recovery before they fight for re-election in two years time.
Britain's economy may be back in a recession again, while rising inflation is hurting households.
Osborne announced several tax changes including a cut in corporation tax to 20 percent in 2015 and a cut in employment taxes for businesses.
Individuals would be able to pay no income tax on their first 10,000 pounds of income from 2014, a year earlier than previously expected.
(Additioal reporting by UK bureau; Editing by Jeremy Gaunt)