Leftist parties in Portugal are set to use their parliamentary advantage to topple the minority government of pro-austerity allies which President Anibal Cavaco Silva reappointed after inconclusive elections on October 4.

Prime Minister Pedro Passos Coelho's centre-right government came first but lost its majority, as many voters rejected the harsh austerity which he has imposed on the country in return for an international bail-out.

Yet Cavaco Silva chose to re-name Passos Coelho as premier, arguing that the precedent established since Portugal shrugged off dictatorship in 1974 gave him the right to try to form a government.

He shunned the claims of the left to power by arguing the mainstream Socialists could only secure a majority by turning to hard-left political allies he attacked for their Eurosceptic stances.

"Never has a Portuguese government depended on the support of anti-European political forces," he said in a barb at the Communists and Left Bloc, which have in the past advocated leaving the euro.

But that stance will be put to the test next week when Passos Coelho stands to lose a vote in parliament on his government programme, which is likely to happen on Tuesday or Wednesday.

The prime minister would then lose his job. Such a government collapse would be the first since 1978 and would put Cavaco Silva in a quandary as the constitution does not clearly say what happens next.

Normally, Cavaco Silva could dissolve parliament and call new elections - an option he has called the "atomic bomb" for its power to encourage rival factions to seek compromise. But the timing of a separate presidential vote in January means he is constitutionally barred from doing so.

That leaves Cavaco Silva either with the choice of inviting Socialist leader Antonio Costa to form a government or keeping Passos Coelho's government in a caretaker capacity until new elections can be held in June.

If he stands by his criticism of the hard left, it is difficult to see him putting a government including the Communists and Left Bloc in power.

But any centre-right government with caretaker status could be a lame duck administration that would just pay bills and struggle to pursue the reforms and encourage the investment which Portugal needs to pursue its tentative economic recovery.