"I made mistakes," Brown says before UK elections

LONDON (Reuters) - On the eve of his first major test at the ballot box, British Prime Minister Gordon Brown acknowledged that he had made mistakes, but insisted he would guide the country through its economic troubles.

Brown's popularity has crumbled over the past six months as the fallout of the credit crunch has damaged a reputation for economic competence built over 10 years as finance minister.

The latest economic news painted a grim backdrop for Thursday's local elections. House prices, an obsession of the British middle classes, showed a year-on-year fall in April for the first time in 12 years and consumer confidence has crumbled.

Voters are also angry about changes to taxes that have left 5 million households worse off, notably the scrapping of the lowest income tax band. Brown's own Labour Party rebelled against the change and forced him to make concessions last week.

"We made two mistakes," Brown told BBC radio. He said the government had not done enough to protect a group of lower-paid workers who do not qualify for tax credits, or to offset the effects of the tax change on 60- to 64-year-olds.

But said he was focused on helping Britons through an economic downturn:

"My aim and my priority is that we can lead the people in Britain through this economic problem and do so by taking the right decisions to get liquidity to the banks, to make sure that the housing market starts moving again."

BLEAK MOOD

Consumers' mood is the bleakest since the 1992 slump when the Conservative government of the time lost its reputation for economic competence, two surveys indicated on Wednesday.

A Bank of England policymaker said on Tuesday there was a real danger of the British economy following the United States into recession and house prices falling by more than 30 percent: political dynamite in a nation where two-thirds own their homes.

Some 4,000 seats on 160 English and Welsh local councils are at stake on Thursday, and Labour is set to suffer. Opinion polls suggest there is a chance that even the high-profile position of London mayor could go to the Conservative Party.

A poor showing will increase speculation about a possible challenger for the Labour leadership, less than a year after Brown took over from Tony Blair.

Although he headed off last week's rebellion over tax, Brown may still face a revolt within his own party over plans to extend the maximum period of detention without charge for terrorism suspects to 42 days from 28.

"We are going ahead with our proposal," Brown said on Wednesday.

"We will put it to the House of Commons and I do say to the opposition parties -- they agree with us in principle that there will be cases of terrorism where we would need more than 28 days to interview witnesses," he told parliament.

Brown does not have to call a national election until 2010 and is hoping for an economic rebound by then. He is also expected to announce a raft of measures over the next few months to show Labour still has drive after 11 years in power.

The Conservatives are well ahead in the national opinion polls. An initial Labour surge following Brown's accession to the top job evaporated after he was perceived to dither over calling an early election, and was forced to rescue a failing bank, Northern Rock.