(Updates with JVP news conference, quotes)
By Simon Gardner and Arjuna Wickramasinghe
COLOMBO, June 16 (Reuters) - The Sri Lankan government's main ally quit the ruling coalition on Thursday, angry at plans to share tsunami aid with Tamil Tiger rebels, reducing the alliance to a hamstrung minority seen limping on for now.
The exit of the Marxist People's Liberation Front (JVP) seriously weakens President Chandrika Kumaratunga's government and means it will struggle to legislate, but the main opposition has vowed not to oust it yet.
The hardline nationalist JVP, which regards the Liberation Tigers of Tamil Eelam (LTTE) as terrorists who do not deserve aid, crossed over to the opposition after a midnight deadline for Kumaratunga to ditch the aid-sharing plan passed unheeded.
But the party left the door open for a possible return to the fold in the future.
"We are now leaving the government, the Alliance, with a sense of deep regret, but there can be an understanding between the two parties in the future," JVP leader Somawansa Amarasinghe told a news conference.
"This will not be the first and the last alliance between the Sri Lanka Freedom Party and the JVP," he added.
Kumaratunga is due to address the nation in a televised speech on Thursday evening.
Top government aides say the aid pact -- under which committees comprising rebels, government officials and Muslims can recommend, prioritise and monitor projects funded by $3 billion in pledged foreign aid -- will be sealed in days.
Kumaratunga plans to present the aid pact to parliament, a top government aide said, possibly as early as next week.
But before that, parliament will have to rearrange its seating plan. The government now has just 81 seats in the 225-seat legislature, and there is now not enough space on the opposition benches, Amarasinghe said.
The main opposition United National Party (UNP) has allayed fears of a total government collapse or snap elections, saying it will not topple the government over the aid-sharing issue. But it wants a presidential election by the year-end.
GOVERNMENT SAFE FOR NOW
A vote of no-confidence would need the backing of the UNP as well as that of the Marxists, and analysts say neither is ready to face either general or presidential elections yet.
Protests by the JVP and hardline Buddhist monks who want the Tigers crushed are expected to escalate.
Police have resorted to tear gas and water cannon twice in the past week to disperse furious saffron-robed monks.
The general public is increasingly disillusioned with what they see as petty, parochial politics that ultimately hit the country's poorest the hardest.
"We are really disappointed with the system," said 27-year-old Saman Padmasiri, tending his news-stand in downtown Colombo. "The decision of the JVP shows that they really don't care about tomorrow."
Squabbling among parties has already stalled wider efforts to convert a 2002 ceasefire between the LTTE and the government into a final end to a civil war that killed over 64,000 people.
Political infighting also threatens economic stability.
Without its slim working majority, the government will be hard pushed to implement long overdue privatisation, taxation and energy reforms, worrying investors -- though local financial markets would welcome an eventual return to power of the UNP.
Analysts say a minority government could survive until the next budget is due in November, and possibly beyond.
"It is quite conceivable a minority government can continue to be in power for several more months," said Kethesh Loganathan of public policy institute the Centre for Policy Alternatives.
However, Kumaratunga could eventually be left with little choice but to call a poll at a time when tens of thousands of survivors of the tsunami, which killed nearly 40,000 people along the island's shores, are living in shacks and tents.