* Central African bloc, France say CAR government not working
* Sources say Djotodia expected to step aside at summit
* French sources say summit will discuss three options for new team
* Djotodia spokesman denies he will step down (Adds information from French source)
By Madjiasra Nako and John Irish
N'DJAMENA/PARIS, Jan 8 (Reuters) - Central African Republic's interim President Michel Djotodia will face pressure to step down at a summit of regional leaders on Thursday amid frustration at his failure to quell his country's religious violence.
Political sources in Bangui and French diplomatic sources said Djotodia would announce his departure at the meeting of the Economic Community of Central African States (CEEAC) in the Chadian capital N'Djamena or shortly afterwards on his return to Bangui.
A spokesman for Djotodia, who seized power in March at the head of the Seleka rebels, denied any such plan. But CEEAC Secretary General Ahmat Allami said the group would tell Djotodia that his transitional government was not working.
French and African troops have struggled to stop tit-for-tat violence between Muslim Seleka rebels and Christian militias in which more than 1,000 people have died.
"If you are incapable, if you are powerless in the face of the situation, make way for others who can do a better job," Allami said in N'Djamena. "It may happen that CEEAC is overwhelmed and cannot continue to support the transition."
"That does not mean that CEEAC can proceed to simply change the head of state. Central African Republic is not a state under tutelage," he said.
Diplomatic sources said on Wednesday that European Union officials have proposed that the EU move quickly and send a force of at least battalion-strength, roughly 700 to 1,000 soldiers, to the west of the country or the capital.
The news will please France, which has urged allies to do more to bolster the 1,600 troops it deployed last month. But it is too early to say how much support there is among EU member governments for sending a military mission that might put EU soldiers' lives at risk.
PATIENCE RUNNING OUT
A source close to Djotodia told Reuters earlier that Central African leaders, led by Chad's Idriss Deby, had run out of patience with Djotodia's failure to end months of violence after his Seleka rebels seized power in March.
"It's finished for him now," said the source. French sources said Djotodia might wait until he returned to Bangui before stepping down.
The meeting in N'Djamena would discuss the various options for continuing the transition, including allowing the president of a National Transitional Council to take over or mandating Prime Minister Nicolas Tiangaye to run the country until elections, now due by the end of the year, French sources said.
A third option would be to create a new transitional team from scratch, though that could take more time and heighten security risks.
The presidents of Congo Republic and Gabon, who are mediating in the crisis, would convene a meeting to discuss the transition in Bangui on Jan. 11, one French source added.
Djotodia, installed as interim president under a deal with regional African states last year, has been powerless to halt the bloodshed which has displaced some 1 million people and stirred fears of a repeat of Rwanda's 1994 genocide.
French Foreign Minister Laurent Fabius said there was an urgent need to get the Central African state working again, and this would be discussed at Thursday's meeting, which France will attend as an observer.
"We're not here to give the thumbs up or down, but there are difficulties with the current team," he told the Senate. "It's not for us to decide this but there is a difficult political situation and all those who are or who will be in power must prepare the elections." (Reporting by John Irish in Paris, Madjiasra Nako in N'Djamena and Ange Aboa in Abidjan; Editing by Daniel Flynn, Sonya Hepinstall and Mike Collett-White)