By Brian Love and Ingrid Melander
PARIS (Reuters) - French trade unions will be allowed to hold a protest march in Paris on Thursday after all, union leaders said on Wednesday, in an apparent volte-face by the government after an earlier decision to ban the demonstration provoked an outcry.
Earlier on Wednesday the Paris police chief, who answers to the interior ministry, said security concerns meant he had "no choice but to ban the demonstration" after unions refused to hold their protest in a large square, wanting instead to march through the capital's streets.
It was the first time a union-backed protest had been banned since the early 1960s, drawing condemnation from lawmakers across the political divide and stirring tensions within an already deeply-divided ruling Socialist Party.
But after an emergency meeting with the government, Philippe Martinez, leader of the hardline CGT union, told a news conference: "Trade and student unions have obtained the right to protest in Paris on June 23 along a route that has been proposed by the interior minister."
Violence on the fringes of recent protests has stretched a police force already challenged by the demands of a state of emergency in place since Islamist militant attacks on Paris last November and fan violence during the Euro 2016 tournament.
The unions have been protesting since early March against planned reforms to loosen labor regulations and make hiring and firing easier. Trade unions say the proposal will erode the rights of workers, while the government says it is key to tackling unemployment.
President Francois Hollande, France's most unpopular leader for decades, and his government have stood firm in their defiance of union demands for the bill to be scrapped.
Wednesday's compromise over the protest could spur hopes for a broader agreement on the draft law which is currently being debated in the Senate, said Frederic Dabi of Ifop pollsters.
"French voters don't like the law but they also want this to be over with," Dabi said.
"They consider the government and the unions are both responsible for the stalemate," he said, adding the government U-turn on the ban showed how tense the situation was.
Interior Minister Bernard Cazeneuve authorized a 1.5 km (almost one mile) loop around a waterway at the foot of the Place de la Bastille square. A police union official said ensuring security would be manageable as long as officers had the authority to arrest known troublemakers on sight.
A year ahead of a presidential election, Hollande's Socialist Party is riven with internal rifts. One party backbencher, Christian Paul, had said Prime Minister Manuel Valls was making "a historical mistake" with the ban.
Karine Berger, a Socialist lawmaker who has also been critical of the government's policies said on Twitter: "We're back to what the French democracy should be like."
The last time a protest march was banned, in 1962, nine people died, eight of them CGT members. They were marching against France's war in Algeria.
(Additional reporting by Simon Carraud, Gerard Bon and Emile Picy; Writing by Richard Lough and Richard Balmforth)