* Polls show ruling bloc is trailing
* Aso critics may try oust him before election
* Local elections could hold key to premier's fate
By Linda Sieg and Yoko Nishikawa
TOKYO, June 30 (Reuters) - Japan's long-ruling Liberal Democratic Party (LDP) fell into further disarray on Tuesday after moves intensified to oust unpopular Prime Minister Taro Aso ahead of an election the ruling bloc looks likely to lose.
Polls show the opposition Democratic Party leading the LDP in the run-up to a parliamentary election that must be held by October, boosting the chance for an end to more than five decades of almost unbroken rule by the business-friendly ruling party.
It was unclear, however, whether LDP critics of Aso, whose support among voters has fallen below 20 percent in some polls, would gain enough momentum to replace him before an election that many expect in August.
A Democratic win would increase the likelihood of a breakthrough in a parliamentary stalemate that has foiled policy implementation as Japan struggles with recession.
"They are in panic mode," said Gerry Curtis, a political science professor at New York's Columbia University, noting that recent internal LDP surveys suggest the party might only win 165 seats in parliament's 480-member lower house.
The party now holds 303 seats and its junior partner has 31, giving them a two-thirds majority that allows them to enact laws rejected by the opposition-controlled upper chamber.
NHK public TV reported on Tuesday that Aso, 68, was considering changing the top party leadership line-up and some cabinet members on July 2, a move aimed at boosting the LDP's ratings. Other media said he had abandoned the plan in the face of stiff party resistance.
Senior LDP executive Takashi Sasagawa rejected calls to pick a new party leader soon.
"There is no time and this would merely cause mistrust," he said.
Japan has had three premiers since Junichiro Koizumi led the LDP to a huge election victory in 2005, with Aso's two predecessors both quitting after a year in the face of the deadlocked parliament and sinking support rates.
PREPARE FOR THE WORST
The fuss in the ruling party comes as Japan struggles to emerge from its worst recession in 60 years. The jobless rate hit a 5-1/2-year high in May and job availability sank to record low, although government stimulus prompted a modest rise in household spending.
At least two groups of anti-Aso LDP lawmakers met on Monday evening.
"We should move forward the party leadership race and the winner should be the 'face' (of the LDP)," former chief cabinet secretary Yasuhisa Shiozaki told reporters after a meeting of younger lawmakers at a central Tokyo restaurant.
Calls for Aso to step down were echoed at a separate meeting of around 20 lawmakers including Koizumi, who was quoted by media as saying the LDP should prepare for possible defeat.
"I think there has been no election in the past that is as tough as this one," Sankei newspaper quoted Koizumi as saying.
"The long reign of an LDP government is unprecedented in a democracy. It would be OK if we became an opposition party."
A ruling bloc loss in a closely watched election for the governor of Shizuoka in central Japan in Sunday would likely boost calls for Aso to quit, but many say a Tokyo Metropolitan Assemble election on July 12 holds the key to his fate.
If the LDP manages to hold its losses to a minimum in Tokyo, Aso may be able to hang on and call an election for August. If the LDP does poorly, moves to oust him will intensify, analysts said. (Editing by David Fox)