Djibouti president's control of parliament at stake in election

* Red Sea state is Western ally against militant Islam

* Opposition USN alliance seen ahead in polls

* Guelleh's party has always controlled assembly

* Result expected overnight

By Abdourahim Arteh

DJIBOUTI, Feb 22 (Reuters) - Djibouti's leader could lose control of parliament for the first time in a legislative election on Friday, raising the risk of political paralysis in a Red Sea ally of the West's fight against militant Islam.

It is the first contested parliamentary vote in Djibouti - which hosts the United States' only military base in Africa - since 2003 when President Ismail Omar Guelleh's party swept all 65 seats in a poll marred by allegations of fraud.

Support for the opposition Union of National Salvation (USN) alliance surged in the run-up to the election, polls have shown, and the group's rallies in the capital have drawn large crowds.

"The time for change has come. Djibouti's opposition has never been better prepared for victory," USN spokesman Daher Ahmed Farah told Reuters after casting his vote.

Voting was generally peaceful as anti-riot police patrolled the city's normally traffic-choked streets. Results were expected late on Friday or in the early hours of Saturday.

In power since 1999, Guelleh has effectively presided over a one-party state for his last 10 years in the former French colony, whose port is used by foreign navies patrolling busy shipping lanes in the Gulf of Aden to fight piracy.

Djibouti counts chaotic Somalia, a haven for al Qaeda-affiliated Islamist rebels, among its neighbours.

There have been calls from some voters for Guelleh to form a coalition government if the opposition wins the election.

"Guelleh is president of all Djiboutians and he should join forces with the opposition if it wins this election to avoid institutions becoming paralysed," Awa Soubaneh, a teacher, said.

Government supporters say an opposition victory would destabilise the tiny country of about 920,000 people. Some voters expressed fears the vote would either be rigged or disputed by the losing camp.

"I pray to God there are no clashes and that fair play prevails between the government and its opponents," said university student Abdillahi Atteyeh Mohamed after voting.

Formed in December, the USN bloc comprises the Republican Alliance for Development, the Djibouti Development Party and the National Democratic Party.

The opposition boycotted a parliamentary election in 2008 and then refused to field a candidate in the 2011 presidential election, saying that the vote would not be free and fair.

The opposition's main goal is to overturn what they say is Guelleh's policy to stifle dissent and the right to assembly.

In February 2011, galvanised by the success of Arab Spring revolts that toppled dictators in Egypt and Tunisia, anti-government demonstrators in Djibouti demanded Guelleh step down and clashed with riot police. (Writing by Richard Lough; Editing by James Macharia)