By Jussi Rosendahl and Tuomas Forsell
HELSINKI (Reuters) - Finland's nationalist Finns Party has split into two groups after choosing hardline anti-immigrant politicians as its leaders, paving the way for Prime Minister Juha Sipila to include the moderates in a new coalition government.
Sipila had said on Monday he would break up his three-party center-right coalition as he wanted to eject the Finns Party.
But lawmakers said 20 parliamentarians, including former Finns Party leader Timo Soini and all other current Finns ministers, will form a new group called New Alternative.
Lawmaker Simon Elo, chairman of the group, told reporters it was ready to participate in Sipila's coalition with its current program.
"This decision will likely ruin our political careers...but we are determined to do this...for the right reasons. Today we are not politicians, but we are doing this for the fatherland's sake," Simon Elo said.
The old Finns Party was left with 17 MPs, and one of them said she would quit too.
With New Alternative, the current coalition - including Sipila's Center Party and pro-EU National Coalition Party - would altogether have 106 of the parliament's 200 seats.
Sipila had been on his way to ask the country's president for permission for the government to resign, but the president's office said the meeting was canceled after the nationalists' announcement.
"This is a very natural and certainly an attractive alternative (for Sipila)...That would give the government a clear majority in the parliament, and the current economic and reform program would stay on track," Danske Bank economist Pasi Kuoppamaki said.
The Finns Party, previously the second-biggest parliamentary group, on Saturday chose Jussi Halla-aho as its new leader and replaced three deputy leaders with anti-immigrant hardliners, steering it towards a more radical right-wing stance.
Analysts had said a change in the coalition set-up could have derailed planned healthcare and local government reforms - central to Sipila's plan to balance public finances.
Finland is recovering from a decade of stagnation. The government, now half-way of its four-year tenure, has sought to improve growth and curb public debt growth by cutting spending and reforming labor laws.
(Reporting by Jussi Rosendahl and Tuomas Forsell; Editing by Angus MacSwan)