A key lawmaker from Switzerland's largest party said on Friday he expected parliament to back a controversial Swiss-U.S. deal to end a bitter tax dispute over UBS.

The lower house economics and tax committee signaled it may be ready to recommend the deal, raising for the first time in weeks the possibility of a parliamentary green light, chairman Hansruedi Wandfluh told a press conference.

Swiss government officials have said parliamentary backing is needed to avoid a U.S. backlash against the world's second largest wealth manager and possible negative repercussions on the Swiss economy.

We assume the deal will go through, said Wandfluh, a member of Switzerland's largest party, the SVP.

The deal had risked being rejected because of opposition from Switzerland's two largest parties, the right-wing SVP and the Social Democrats (SP).

But lawmakers told Reuters the SVP had suddenly changed its position on Friday, paving the way for a green light in parliament.

(This) makes it very likely that the deal will be backed (in parliament), Susanne Oberholzer Leutenegger, a socialist member of the economics and tax committee said.

The Swiss parliament is due to vote on the issue in June.

Support for the deal would end a Swiss legal deadlock and allow Switzerland to pass on to U.S. tax authorities the names of 4,450 U.S. clients of UBS holding secret accounts in Switzerland.

Failure to win parliamentary backing for the deal would be damaging to UBS and other Swiss banks at a time when the country is already under international attack over its bank secrecy laws.

(Writing by Lisa Jucca and Jason Rhodes; Editing by David Cowell)