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(Adds finance minister's comments, background on EFSF)
HELSINKI, Sept 21 (Reuters) - Finland's parliament is likely to approve extending the powers of the euro zone rescue fund in a vote next week, Finance Minister Jutta Urpilainen said on Wednesday, potentially clearing an obstacle to a stronger euro zone crisis response.
Euro zone leaders agreed on July 21 to give the European Financial Stability Facility (EFSF) more powers, including the ability to give precautionary loans to countries and to buy sovereign bonds of struggling states. The changes need to be approved by national parliaments.
"I hope and think it is likely the changes go through," she told reporters when asked about the Finnish parliament's approval of the EFSF's new powers. "As far as I can see, those decisions are due to be done next week."
"It would give a very bad signal out of Finland if the changes to this crisis facility were to be turned down here," she said.
Urpilainen leads the Social Democratic Party, the second-biggest in Finland's coalition government led by the right-leaning National Coalition.
The Finnish government is largely pro-Europe, but faces pressure from voters increasingly fed up with bailing out other European nations while they face austerity at home.
Amid such pressure, the government has said it will only provide new loans to Greece if it can obtain collateral in exchange, a condition that has raised concerns of delays to the rescue plan. Some member states said they would want the same.
Urpilainen said negotiations over the collateral issue were ongoing and that she hoped a deal would be reached as soon as possible.
"Last week the Eurogroup decided on two principles, that collateral must be available for everyone and that they include conditions," she said. "What these conditions would be has not yet been decided, but it is a subject of negotiations as is the collateral model."
Austrian Finance Minister Maria Fekter said the last week that the plan was to make collateral so expensive that only Finland would feel the need to make use of it. (Reporting by Jussi Rosendahl; Editing by Toby Chopra)