Riga - The Latvian government headed by Prime Minister Ivars Godmanis was wobbling Friday after the two largest parties within the ruling four-party coalition signalled they would call on the premier to resign.

Following a meeting designed to thrash out internal squabbles over government reorganisation plans, leaders of the People's Party
(TP) and the Greens and Farmers' Union (ZZS) said they had lost faith in the embattled prime minister just two weeks after they had backed him in a parliamentary no confidence vote.

ZZS leader Augusts Brigmanis plus TP leader and interior minister Mareks Seglins announced at the meeting that they were no longer willing to cooperate in the coalition, according to comments from Andris Berzins, amember of Godmanis' own Latvia First/Latvia's Way Party (LPP/LC).

"Such an announcement means that the government will step down," Berzins said.

On Friday 13 February Latvian President Valdis Zatlers said he had lost confidence in Godmanis after he backtracked on plans to cut the number of government ministries as part of hard-hitting austerity measures, though the two leaders later effected a partial reconciliation.

After Friday's coalition meeting, Godmanis made his way to Riga Castle for another meeting with Zatlers, saying he would not comment until it had concluded.

If Godmanis departs, the timing would be particularly embarrassing with an IMF mission currently in the country to review what progress had been made on meeting the conditions of a 7.5-billion-euro (9.5- billion-dollar) loan from the IMF, the European Union, and other bilateral and multilateral donors.

One of the key IMF conditions for the loan was what it termed a "broad political consensus" which has signally failed to materialise in the Baltic state.

After years of rapid economic growth, the Baltic state's economy collapsed in late 2008, forcing the Godmanis government to ask for a bailout.

Under the terms of the bailout, the government is introducing a series of tough measures aimed at rebalancing the Latvian economy, which involve wage cuts, job losses and curbs on public spending.

On February 18 finance minister Atis Slakteris predicted Latvian GDP would decrease by 12 per cent this year, slashing his previous prediction of a 5 per cent contraction in the economy.

Public anger at the cuts and a perceived lack of accountability from politicians led to riots in the streets of the Latvian capital, Riga, on January 13 and a blockade by farmers on February 3. (dpa)