* World soccer body backs down from threat to drop host city
* Decision taken after signs of progress on three fronts
* Stadium should now be ready by May 15, say officials (Adds details of progress in Curitiba, other host cities)
By Mark Gleeson and Tatiana Ramil
FLORIANOPOLIS, Brazil, Feb 18 (Reuters) - FIFA will stick with plans to hold World Cup matches in the Brazilian city of Curitiba, officials said on Tuesday, backing down from a threat to drop the host city due to delayed work on a stadium.
FIFA secretary general Jerome Valcke said the decision followed signs of progress on construction, financial guarantees and commitments by local organisers. Officials said the stadium should now be ready by May 15, less than a month before the tournament starts.
"There was no other decision we could take but to keep Curitiba in," Valcke told a news conference in southern Brazil. "They understood the pressure we put on them."
Even as Valcke expressed renewed confidence, the severity of his ultimatum made clear that patience is running out at soccer's world governing body, which has warned for months that work was critically behind schedule at stadiums across Brazil.
Curitiba, where world champions Spain will play a first-round match, is the most extreme case of the myriad delays plaguing host cities. Four other stadiums, including the venue for the prestigious opening match in Sao Paulo, also missed a December deadline for completion and are racing to finish work.
If FIFA had made good on its threat to exclude Curitiba from the tournament, it would have been a major embarrassment for Brazil and President Dilma Rousseff, who has promised "the World Cup of all World Cups" and touted benefits for a dozen cities chosen to host games.
A smoothly run tournament could help boost her popularity before she seeks reelection in October.
The run-up to the World Cup, however, has been an increasingly frantic effort to finish stadiums, expand airports and prepare cities for hundreds of thousands of foreign fans.
Work at several airports is even more delayed than the stadiums and at least one terminal, in the city of Fortaleza, will be substituted with a temporary canvas structure.
Five cities hosting matches will not complete the public transportation projects they had promised.
Complicating matters, Brazil has been besieged by periodic street protests since last June, with many demonstrators railing against the World Cup as a waste of money that would be better spent on education, healthcare and public transport.
Under pressure to ensure that mass protests do not disrupt the tournament, Brazilian officials are spying on protest groups and debating stricter legislation aimed at containing street demonstrations.
Four matches are scheduled to take place at the stadium in Curitiba: Iran v Nigeria on June 16, Honduras v Ecuador on June 20, Australia v Spain on June 23 and Algeria v Russia on June 26. The stadium will not be used after the opening group stage.
The irony of Curitiba's delicate position is that the city has long been considered a model of Brazilian efficiency, with thoughtful urban design and well-developed public transport.
While other host cities have built world-class stadiums from scratch despite a lack of top-tier local teams, Curitiba is renovating an existing stadium owned by Atletico Paranaense. Built in 1999, the Arena da Baixada was until recently the most modern soccer venue in Brazil.
Officials following the stadium's progress say the trouble started when the club decided to handle the job itself instead of bringing in one of a handful of major construction firms that dominate big infrastructure projects in Brazil.
Atletico Paranaense have struggled to get financing for the job and blamed slow progress on tight cash flow. The cost of the renovation has also climbed to some 319 million reais ($133 million) from an initial estimate of 131 million reais.
A state development bank stepped in last week with a credit line to help finish the job. FIFA officials said they would also be taking up management of the stadium for the next two months along with local government.
Organisers are planning two test matches in coming months, before the finished stadium is delivered in the middle of May.
Elsewhere in Brazil, delays have worried FIFA without reaching the level of alarm in Curitiba. After Valcke's visit to Porto Alegre this week, he said work on temporary structures needed to pick up but there was no risk to its host city status.
In Cuiaba, where Reuters reported that a fire had caused far more damage to the unfinished stadium than officials acknowledged, Valcke said he had requested more information from an independent technical team.
"We have got that information and we are confident the stadium is safe," he said at Tuesday's news conference.
Local officials at the conference were confident about progress and constructive about the role of Valcke, who faced a firestorm in 2012 over his suggestion that Brazil needed "a kick up the backside" to speed up its World Cup preparations.
"It was good that Valcke came and pulled our ears," said Reginaldo Cordeiro, Curitiba's official running preparations for the tournament. "It's good for us to wake up."
But Valcke said his decision did not depend on Curitiba.
"We have had strong support from the Brazilian government. That's the reason Curitiba is still a World Cup city," he said. "Without federal support, today it would not still be a World Cup city." (Additional reporting by Eduardo Simoes in Sao Paulo; Writing by Brad Haynes; Editing by Todd Benson)