NEW DELHI (Reuters) - The DMK party, a key member of India's ruling coalition, said on Saturday it was withdrawing from the Congress-led government, dealing a huge blow to Prime Minister Manmohan Singh as he battles a series of corruption scandals.
The DMK said it would give issue-based support to the government in parliament, where its 18 seats give the Congress-party led coalition a slender majority.
The Congress-led government can still survive by both depending on the DMK for support on key bills and trying to bring in other regional parties into its coalition.
The first test will come with the federal budget for 2011-12 which was introduced in parliament last week and has to be passed in the current session. The government would fall if it loses the vote.
A source at the prime minister's office said there was no crisis facing the government.
"I don't think we have received any resignation letters so far. There is no crisis at all," the source said.
The withdrawal of the ministers will make it much harder for the government to pass any reform bills, weaken the prime minister further and bolster the opposition.
The government has been hit by a series of corruption scandals that have already led to the resignation of a DMK minister from the government.
The party said it had withdrawn over a dispute over seats to be contested in an election in the DMK's Tamil Nadu state, although many analysts see its withdrawal as linked to a massive telecoms scandal that has implicated the party.
"The DMK has decided to withdraw from the government because the Congress does not seem interested to continue the alliance for the coming state assembly elections," a statement from the party said.
The crisis comes days after Singh suffered a loss of face after the Supreme Court rejected his appointment of a tainted civil servant as the head of the country's main anti-graft agency. Singh said he accepted responsibility.
(Reporting by Krittivas Mukherjee and Alistair Scrutton)