* BoE holds rates at 0.5 pct, leaves QE total at 200 bln stg
* Gilts fall, sterling up as QE risk did not materialise
* Vote breakdown to be published on Oct. 20
(Refiles to add dropped word in paragraph 2)
By David Milliken
LONDON, Oct 7 (Reuters) - The Bank of England held monetary policy steady as expected on Thursday, in a decision which may well conceal a more vigorous debate and a three-way split over how to respond to a highly uncertain economic outlook.
The central bank's monetary policy committee kept interest rates at a record low 0.5 percent for a 20th consecutive month, and announced no expansion to the 200 billion pounds ($319 billion) of financial assets bought between March 2009 and January this year.
Sterling hit an eight-month high against the dollar
"Credibility concerns surrounding the high headline inflation rate and the BoE's close association with the government's deficit reduction plan mean that most MPC members would have been wary of re-starting gilt purchases," said Barclays Capital economist Simon Hayes.
"Next month's meeting, which takes place against the backdrop of the November Inflation Report, would be a more natural time for a policy shift," he said.
All 61 economists in a Reuters poll last week forecast that rates would stay unchanged, and all but one expected no expansion to the QE programme this month, despite MPC member Adam Posen saying he could vote for increased asset purchases.
However, a growing minority do expect the BoE to expand QE at some point in the next six months due to weak global demand and planned spending cuts of 25 percent to the budgets of most government departments over the coming four years.
This is despite the fact that inflation in Britain is above target at 3.1 percent, and only expected to fall slowly, a factor that persuaded MPC member Andrew Sentance to vote for higher rates at each meeting from June to September.
A breakdown of this month's MPC vote will not be published for another two weeks but could show the first three-way split since November 2009, if both Posen and Sentance vote as expected.
Earlier this week, the Bank of Japan cut interest rates close to zero and said it would pump more money into the economy. The Federal Reserve has also indicated a willingness to consider further stimulus to shore up its faltering recovery.
Britain's economy grew by a surprisingly strong 1.2 percent in the second quarter but growth is expected to slow sharply in the second half of the year.
House prices in Britain plunged a record 3.6 percent in September, according to mortgage lender Halifax, and consumer confidence has weakened in the run-up to the government's Oct. 20 public spending review which will detail the toughest austerity drive since World War Two. (Additional reporting by Christina Fincher and Fiona Shaikh, editing by Mike Peacock)