* Parliamentary vote in May could spark protests
* Algeria so far largely untouched by "Arab Spring"
* Opposition says gov't will not allow fair vote
By Lamine Chikhi
ALGIERS, Jan 4 (Reuters) - Algeria's main opposition parties have demanded that President Abdelaziz Bouteflika remove the prime minister and appoint an interim cabinet of technocrats to ensure a parliamentary election later this year is not rigged.
Algeria is the only country in North Africa largely untouched by the "Arab Spring" uprisings, but the election, scheduled for May, could be a catalyst for a surge in anti-government protests which would destabilise the oil and gas exporter.
A source with knowledge of discussions inside the ruling elite said a decision had already been made to appoint a more neutral figure as new prime minister to oversee the election, but there was no confirmation of this.
The main opposition parties demanded that Prime Minister Ahmed Ouyahia be removed before the election because, they said, his government could not be trusted to oversee a free and fair vote.
"If Bouteflika is serious about free and fair elections, he must accept our demands, and appoint a new government with one task: to supervise the elections," said Fateh Rebai, whose Ennahda party was one of those seeking a change in government.
"If we really want free and fair elections, we must change the government. We do not trust it," he told Reuters.
"(Election) fraud will mean that the government is not serious about reforms, making a revolt a very likely scenario."
That call was backed by a secularist opposition group, the Workers' Party. Two other Islamists parties, the MSP and the Front for Justice and Development, have also demanded a new government.
"Our Majlis Shura, which is our highest political body, has urged Bouteflika to appoint a government of technocrats to supervise the next parliamentary election," said a senior official with the MSP, which last month withdrew from the governing alliance..
Bouteflika, who is 74, has so far not responded publicly to the demand for a new government before the election. The opposition parties have limited influence over the president.
But the source close to the ruling elite said a decision had been made to remove Ouyahia and the favourite to replace him was Tayeb Louh, a former judge who is now minister of labour.
Louh is a member of the FLN party, which dominates Algeria's ruling establishment, but with his background as a judge he could reassure opposition parties that the election would be conducted fairly.
OPEC member Algeria supplies about a quarter of Europe's imported gas and is fighting an insurgency by al Qaeda's north African branch.
Last year north African states Libya, Tunisia and Egypt saw revolts which overturned entrenched leaders, while Algeria's neighbour Morocco, in a response to the "Arab Spring," elected an Islamist prime minister for the first time.
Algeria was largely untouched, apart from some isolated riots and a protest movement which quickly lost momentum.
Bouteflika enacted limited reforms, including the lifting of a 19-year-old state of emergency, but the establishment which has run the country since independence from France in 1962 has maintained its firm grip on power.
However, there is a growing acknowledgement from senior officials that voting needs to be more transparent and fair than in the past if it is not to trigger a wave of protests.
In a speech in December, Bouteflika said that past elections had fallen short of democratic standards. He said the supervision of the vote would be entrusted to the judiciary. The interior ministry oversaw elections until now.
In another first, the Algerian government has invited European Union observers to monitor the election.
The next election must take place within a framework of "democracy, transparency and free and regular competition between different political forces," Bouteflika said in his speech last month.
Algeria is just emerging from two decades of civil strife during which 200,000 died, according to international organizations.
Violence has sharply diminished, but a hardcore of militants operating under the banner of al Qaeda still targets security forces in remote areas with ambushes and suicide bombings.
Algeria plunged into chaos after the military-backed government scrapped the 1992 legislative election which a radical Islamist party was poised to win.
Even if this year's election is free and fair, it will not hand power to hardline Islamists. They are divided, their popularity has been dented by violence, and they are barred from Algerian politics. (Editing by Rosalind Russell)