BEIRUT – Lebanon's opposition groups formally informed the president on Tuesday of their rejection of a proposed government line-up by prime minister-designate Saad al-Hariri, raising the possibility that Hariri will step aside.

The billionaire magnate handed President Michel Suleiman his proposal on Monday, a move quickly rejected by the March 8 opposition alliance, that includes Syria- and Iran- backed Hezbollah, because it had not been agreed by them.

We do not consider what happened to be appropriate, either with our democratic values or in how to deal with us. We were demanding from (Hariri) to present a draft that is acceptable to our demands in order to negotiate over it, said Gebran Bassil, a Christian opposition politician, after meeting Suleiman.

We have informed (the president) of our rejection but at the same time, we have illustrated all the readiness to continue dialogue and negotiation.

The delegation also included representatives from Hezbollah and its Shi'ite ally Amal.

Political sources said Hariri might react to the opposition's categorical refusal by stepping down. Should he do so, Suleiman is expected to hold consultations with parliamentarians this week to designate a new prime minister.

With the U.S.- and Saudi-backed Hariri holding the majority in parliament after winning in June 7 polls, he is expected to be reappointed, renewing his mandate for the premiership.

Hariri had been unable to reach a deal with the opposition on the government since he was appointed prime minister in June.

The prolonged impasse over the government has held up key decisions on economic and financial reform. Some fear the standoff could revive sectarian tensions which have frequently sparked street violence in the past.


Hariri's act itself does not change the overall reality, said Paul Salem, director of the Carnegie Middle East Center in Beirut. I tend to think it helps move the ball forward. It gives it some dynamism, he told Reuters.

It will attract regional and international attention, puts Lebanon in the headlines again, indicates there is a problem, which might trigger some 'help' to ... push players here to get this deal done, he said, referring to the factions' competing regional and international allies.

Several rounds of talks held between Saudi Arabia and Syria immediately after the election were credited with quickly reaching a broad cabinet seat-sharing formula and forcing Hezbollah to drop its demand for veto power in government.

But the talks stopped abruptly in July.

The rival factions have agreed on the division of seats in the new cabinet in which Hariri's March 14 coalition gets 15 seats and the March 8 opposition alliance -- which also includes Hezbollah ally and Christian opposition leader Michel Aoun's Free Patriotic Movement -- gets 10 seats.

President Suleiman is given a decisive say over cabinet decisions by naming five ministers.

Unable to reach agreement with opposition politicians on the details, Hariri handed Suleiman a 30-seat cabinet proposal on Monday in the hope of securing a new government before the president travels to the U.N. General Assembly later this month.

Central to the dispute are Aoun's demands for Bassil, his son-in-law, to retain his post as telecoms minister and to name the interior minister -- both demands rejected by Hariri.

Hezbollah leader Sayyed Hassan Nasrallah on Monday attacked Hariri's move, saying it would further complicate the problem.

(Editing by Charles Dick)