By Jussi Rosendahl
HELSINKI (Reuters) - Finnish foreign minister Timo Soini said on Sunday he would step down as leader of the nationalist and eurosceptic Finns party in June, a move which could challenge the future of the country's three-party government.
The departure of Soini paves the way for a more hard-line leadership, surveys have suggested, as many of its core voters bridled at compromises he made as part of an austerity-focused government that has cut workers' benefits while catering for an influx of migrants.
Analysts say the move could even bring down the coalition, which includes the Centre Party and the conservative NCP, at a time of tough reforms aimed at fixing a stagnant economy.
"I will not seek a new term from the party congress in June. It is time for something else," Soini wrote in a blog. "This was not an easy decision."
He said he would like to stay on as foreign minister if the party remains in the government.
Soini, aged 54, has led the party he co-founded for 20 years, dragging it out from obscurity and into the mainstream when its opposition to the European Union's sovereign bailouts spooked financial markets in 2011.
But the party has seen its support drop due to compromises it has made in government, which it joined in 2015. The second-biggest in the parliament, the party now ranks fifth in the polls with support of about 9 percent.
A survey by Lannen Media in January showed the most popular successor for Soini among active party members would be Jussi Halla-aho, currently a member of European parliament who is known for his tough stance against immigration and the European Union.
"Personally, I tend to think that a membership in the EU is not in Finland's strategic national interest," Halla-aho told Iltalehti newspaper last month.
Halla-aho has also proposed sanctions against organizations that rescue refugees and immigrants from the Mediterranean, saying it encourages movement from Africa to Europe.
Halla-aho said he will likely run for the party presidency in June. He was not immediately available for comment.
"This (Soini's announcement) can have dramatic consequences... I don't see that the Finns could continue in the government if Halla-aho gets elected. That could lead to a government crisis," said Kimmo Gronlund, professor of political science at Abo Akademi.
The centre-right government, led by Prime Minister Juha Sipila, has faced demonstrations and strikes over its austerity program aimed to kick-start the economy after a decade-long stagnation.
(This version of the story has been refiled to fix analyst's name in paragraph 12 and clarify the party's position in parliament in paragraph 7)
(Editing by Jacqueline Wong and Louise Heavens)