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* Japanese public wary, split on nuclear power
* Government likely to await ruling by authorities in prefecture
* Critics say government too hasty in seeking restart of reactors
* Govt mulls mandatory power cuts
* Kansai Electric consumers may face 20 pct power cut goals (Adds info from govt draft document on Kansai region, power cuts)
By Linda Sieg and Yoko Kubota
TOKYO, May 14 (Reuters) - The local assembly in a Japanese town that hosts a nuclear plant agreed on Monday it was necessary to restart two off-line reactors, its chairman said, the first such nod since all the country's stations were halted after the Fukushima crisis.
But further discussion lies ahead before reactors No. 3 and No. 4 at Kansai Electric Power Co's Ohi plant in western Japan can be reconnected to the grid.
With power shortages looming in the region when demand peaks this summer, the central government has been trying to win approval from towns and prefectures that host reactors. All 50 reactors are off-line since the last one shut down for maintenance on May 5.
Businesses and consumers in Kansai region, served by Kansai Electric Power Co, could be asked to cut electricity use by 20 percent this summer compared to 2010 levels, according to a government draft document released on Monday.
The government will consider whether to issue a mandatory power cut order for corporate users in Kansai, which includes the vast Osaka metropolitan area, or impose rolling blackouts in several regions, the document also showed.
It will reach a conclusion in about a week.
Mandatory restrictions were imposed in some regions last year after the Fukushima crisis, the worst since the 1986 Chernobyl explosion, with three reactors suffering meltdowns after the plant was hit by a huge earthquake and tsunami.
Kansai Electric's service region, which relied on nuclear power for more than 40 percent of its generation before the Fukushima crisis, may see a 14.9 percent shortage in August, a government panel concluded on Saturday.
But if four other utilities can cooperate on power conservation, this may help make up for shortfalls in Kansai and reduce its power saving goal to 15 percent, the document said.
"We want to avoid issuing a mandatory power saving order, but we need to think of various measures in the case of an emergency," a government official told reporters.
The central government last month said the two reactors in Ohi, Fukui prefecture, 360 km (225 miles) west of Tokyo, were safe to restart.
Officials must still win over a wary public - including residents of regions close enough to be at risk from a nuclear accident but too distant to reap economic rewards. Delays in setting up a new nuclear regulatory agency due to disputes in parliament have further spooked voters.
Kinya Shintani, chairman of Ohi town assembly, said the local economy had been affected by the shutdowns.
"Largely understanding the necessity of nuclear power and taking into consideration residents' opinions as well as the impact on consumers' livelihoods and the economy, we decided to agree to a restart," he said in a statement.
Ohi received about 2.5 billion yen ($31 million) in subsidies in the financial year to March 2010 related to Kansai Electric's four reactors. Many jobs also depend in some way on the plant.
The central government has no legal obligation to win local approval, but is unlikely to proceed with restarts without the agreement of the host town and prefectural government. It is uncertain, however, that authorities would override opposition from nearby prefectures with public opinion divided.
A weekend survey by the pro-nuclear power Yomiuri newspaper showed that 45 percent of respondents backed restarting reactors deemed safe and an equal number were opposed.
Some critics say the government is making undue haste to get reactors up and running because surviving peak summer demand without nuclear power would make it hard to convince the public that atomic energy is vital.
Environmental group Greenpeace said the government's "reckless push" to get reactors back in service "has left many communities thinking they have to choose between risks to their health and safety, and risks to their jobs and prosperity.
Tokyo Electric Power Co, Japan's biggest utility and the owner of the Fukushima pant, posted on Monday an annual loss of almost $10 billion as compensation claims for the radiation disaster soar and fuel costs grew after idling all its atomic plants.
Nuclear power produced nearly 30 percent of Japan's electricity before the crisis. The government is working on a energy mix policy it hopes to unveil this summer, replacing a programme that had aimed to boost the share of atomic power to more than 50 percent by 2030. ($1 = 79.8800 Japanese yen) (Editing by Aaron Sheldrick and Ron Popeski)