Ecuador lawmakers fail to reach water bill deal

* Natural resources sensitive issue in Ecuador
* Correa remains firmly in power despite protests

QUITO, May 13 (Reuters) - Ecuadorean lawmakers on Thursday failed to reach a deal on suspending debate of a contested water bill that has sparked protests by indigenous groups who fear it threatens their rights to natural resources.

President Rafael Correa says the bill will better regulate the water system. But the failure by lawmakers to agree over the bill opens the way for more indigenous protests over an issue that is a political headache for his leftist government.

Lawmakers were ruling on a motion by Congress President Fernando Cordero to postpone debate over the bill for six months while indigenous communities were consulted over the impact of the proposal on their territories.

Opposition and some pro-government lawmakers blocked an attempt to reach a deal on postponement.

"The water law will be voted on the day we can have the consultations," Cordero said after the vote though no date was set to resume debate on the proposal.

While Ecuador's indigenous groups were instrumental in toppling previous governments, analysts say Correa has a solid grip on power and indigenous leaders are more splintered than in past protests when thousands descended on Quito.

Indigenous leaders say the water bill will pave the way for privatizations of natural resources and impact their farming and small-scale mining industries. Correa dismisses the protesters as "liars."

"The government is irresponsible and is playing with the Ecuadorean people," said Marlon Santi, head of the Indigenous Confederation of Ecuador or CONAIE. "The protests will continue for now."

Earlier this month police used tear gas to break up protests outside the Congress building and some demonstrators broke into the building but were ejected by security forces.

Correa, a U.S.-trained former finance minister, came to power in 2007 with broad indigenous support after promising to challenge the political old guard many Ecuadoreans blamed for years of instability in the world's largest banana exporter.

Correa still has more political capital than predecessors after introducing measures such as increased welfare spending for the poor and striking out at foreign investors. But he has seen his popularity wane as the OPEC nation's economy flagged during the global economic crisis.