* Centre-right parties unite against PM
* Parties fear Zeman may drag on process
* Party leaders want the chance to form new cabinet
By Jan Lopatka
PRAGUE, Aug 7 (Reuters) - The new Czech government formed by allies of President Milos Zeman looked set to lose a vote of confidence on Wednesday, extending a standoff between the president and political parties that has crippled policymaking since June.
Zeman appointed his long-time ally, economist Jiri Rusnok, as prime minister in June despite opposition from the main parties, sparking a standoff with the parties who accuse him of breaking democratic customs.
The president, who retains influence with parliament's left-leaning groups, has secured the support of three parties for his cabinet, but remains a handful of votes short of the simple majority of those present in the 200-seat lower house.
Centre-right parties, whose coalition collapsed in June after criminal charges were laid against a close aide of the then Prime Minister Petr Necas, say they have 101 votes and demand the right to form the next administration.
The conservative TOP09 party refused to meet Rusnok for talks ahead of the vote expected later on Wednesday.
"We do not want, even indirectly, to legitimise the unacceptable formation of the government," the party said in a statement on Wednesday. At least two other deputies said they would vote against Rusnok.
Markets have so far largely ignored the political standoff, as the republic has kept its deficits under control, outperforming its self-imposed targets despite recession. Debt is at half the EU average and debt yields are by far the lowest in central Europe.
However, the crisis clouds the outlook for the 2014 budget, in which the past and current cabinets planned to ease spending cutbacks to help revive an economy that has been in recession since 2011.
Rusnok will have to resign if he loses the vote, though will stay on in a caretaker capacity until a new government is formed. As head of state, Zeman has the sole right to pick the next prime minister.
Party officials have said they feared Zeman may prolong the process to let Rusnok's cabinet continue to replace senior state officials, something the left and right have protested against.
The government has dismissed senior ministry officials and the heads of the state railways, one of the country's largest employers. Rusnok and ministers have also said they would consider changes at supervisory boards of other state and semi-state companies, including electricity firm CEZ.
Zeman confirmed on Wednesday he would keep Rusnok in place for several weeks, even if he loses Wednesday's confidence vote, because of police investigations into links between politicians and businessmen which contributed to the fall of the previous cabinet.
"I have been assured this investigation will be concluded in several weeks and, I can assure you, even if you put me on the rack I will not make a second attempt (to form a cabinet) during those several weeks," he told parliament.
If Zeman's second appointee fails to win a confidence vote, the speaker of parliament - a post held by the centre-right bloc - would nominate a candidate for prime minister.
The political standoff could even lead to an early election later this year if parties from the right and left agree to dissolve parliament. They would need 120 votes in the lower house to do so.
The centre-right, deeply unpopular after years of austerity and graft scandals, has so far opposed early elections that would likely hand power to the left. (Editing by Jon Boyle)