UPDATE 1-Italy approves decree to stave off bankruptcy for Rome council
* Bailout secured after parliamentary battle
* Deal averts threats to local services
* City mayor threatened shutdown unless deal reached (Updates bailout amount, adds details from decree)
By Gavin Jones
ROME, Feb 28 (Reuters) - Matteo Renzi's new Italian government on Friday approved an emergency decree to bail out Rome city council whose mayor had warned the capital would have to halt essential services unless it got financial help.
The decree transfers 570 million euros ($787 million) to the city to pay the salaries of municipal workers and ensure services such as public transport and garbage collection.
Renzi, under pressure from critics who say Rome is getting favourable treatment, attached conditions to the bailout.
Rome must spell out how it will rein in its debt, justify its current levels of staff, seek more efficient ways of running its public services and sell off some of its real estate, the government decree said.
Rome's finances have been in a parlous state for years and it has debts of almost 14 billion euros which it plans to pay off gradually by 2048.
The city of some 2.6 million people has been bailed out by the central government each year since 2008.
Critics say it is inefficiently run, plagued by strikes, especially in its public transport and over-staffed. They accuse local politicians of seeing the huge army of municipal employees as a source of votes rather than as servants of the public.
The city has around 25,000 employees of its own with another 30,000 or so working for some 20 municipal companies providing services running from electricity to garbage collection. ATAC, which runs the city's loss-making buses and metros, employs more than 12,000 staff, almost as many as national airline Alitalia.
Rome's administrators say it needs help with extra costs associated with housing the central government, such as ensuring public order for political demonstrations, and to provide services for millions of tourists.
Away from the historic centre, a magnet for visitors from around the world, the city's sprawling periphery is plagued by poor transport links, crumbling roads and patchy public services and infrastructure.
In recent weeks the so-called "Save Rome" decree had been blocked in parliament due to filibustering by the Northern League and the anti-establishment 5-Star Movement, which objected to several other measures incorporated in the package.
The decree was eventually withdrawn on Wednesday, to the fury of Rome's Mayor Ignazio Marino, a US-trained surgeon and a member of Renzi's centre-left Democratic Party. Marino threatened to "block the city from Sunday" unless its finances were guaranteed by Renzi.
City officials welcomed Friday's announcement, saying it marked the beginning of a new phase. "We have to continue with discipline, development and improving the efficiency of our services," said Paolo Masini, a senior official of the centre-left administration which took power last year.
Renzi, the outgoing mayor of Florence who became prime minister this month, was quickly accused by centre-right opponents of bowing to Marino's threats and favouring Rome compared with other hard pressed Italian cities.
Mario Borghezio, a Northern League firebrand, said it showed that the north of Italy was being treated as a "colony" by "Roma ladrona" ("thieving Rome").
However Cabinet Undersecretary Graziano Delrio stressed to reporters that the decree merely brought forward a transfer of funds that had already been planned, as in other years, and was needed to keep the capital afloat.
The new decree strips out some of the separate measures in the original "Save-Rome" package and gives all town councils the possibility to increase local taxes. ($1 = 0.7240 euros) (Reporting by Giuseppe Fonte, writing by Gavin Jones)
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