BEIJING (Reuters) - If corruption is allowed to run wild in China then the ruling Communist Party risks major unrest and the collapse of its rule, state media on Monday quoted Communist Party chief Xi Jinping as saying at one of his first major meetings since taking the role.

In unusually blunt language, Vice President Xi, who assumes Hu Jintao's job as head of state in March, said that graft was like "worms breeding in decaying matter" -- an old Chinese phrase meaning "ruin befalls those who are weak".

"In recent years, some countries have stored up problems over time leading to seething public anger, civil unrest and government collapse -- corruption has been an important factor in all this," state newspapers quoted Xi as telling a study session for the Politburo, the party's second-highest decision-making body.

"A great deal of facts tell us that the worse corruption becomes the only outcome will be the end of the party and the end of the state! We must be vigilant!" Xi added.

"Recently, our party has had serious discipline and legal cases of a despicable nature which has had a bad political effect and shocked people," he said, without naming any of these incidents.

The run up to this month's party congress, at which a new generation of leaders was unveiled, was overshadowed by a scandal involving former political heavyweight Bo Xilai, once a contender for top leadership in the world's second-largest economy.

Bo was expelled from the party this year and faces possible charges of corruption and abuse of power, while his wife was jailed for murdering a British businessman.

Xi said that party members, especially those at senior levels, should not abuse their positions for personal gain, and that they were not above the law.

Officials "must also strengthen their management and control over their relations and those who work with them", Xi added.

The New York Times said last month that the family of Premier Wen Jiabao had accumulated at least $2.7 billion in "hidden riches", a report China labeled a smear.

However, without an independent judiciary, efforts to fight graft will almost certainly falter, and the control-obsessed party has shown no sign of embarking on this reform.

(Reporting by Ben Blanchard; Editing by Michael Perry)