Dec. 4 (Bloomberg) -- Canadian Prime Minister Stephen Harper won approval to suspend the country’s legislature for more than seven weeks in a bid to stave off a challenge from opposition parties seeking to bring down his government.

Harper told reporters Governor General Michaelle Jean, the country’s titular head of state, agreed to his request to close Parliament until Jan. 26. The government’s first order of business will be a budget scheduled for Jan. 27, and Harper called on the opposition to work with his administration to help the country’s ailing economy.

“The opposition criticism is ‘we have to focus on the economy immediately’ and today’s decision will give us an opportunity to focus on the economy,” Harper told reporters outside the governor general’s residence in Ottawa today. “It is critical for the three parties to work together on the decisions that need to be made with respect to the budget.”

The main opposition Liberal Party agreed Dec. 1 to form a coalition with the New Democrats in a bid to accelerate a stimulus package for the economy and oust the Harper government. The separatist Bloc Quebecois would not be part of the governing coalition though agreed to help it pass any legislation deemed matters of confidence.

Harper refused to grant the opposition a vote in Parliament that would have brought him down, and asked Jean instead to suspend the legislature. The three opposition parties combined hold a majority of seats in the House of Commons.

Economic Crisis

The Canadian dollar pared losses after the announcement on expectations the suspension may ease the political uncertainty for a few weeks, said Steven Butler, director of foreign- exchange trading at Scotia Capital in Toronto.

“I think this is quite positive,” he said. “There are still a lot of questions about what will happen with the budget in January,” although by then some of this “massive stimulus will have had time to take effect globally.”

The Canadian dollar dropped to C$1.2589 per U.S. dollar, from C$1.2521 yesterday. One Canadian dollar buys 79.37 U.S. cents.

The turmoil centers on how to manage Canada’s response to the global economic crisis. In a televised speech last night, Harper accused opposition parties of rebuffing his calls to work together. The prime minister also said the proposed Liberal-NDP coalition isn’t legitimate because the group has no mandate from voters. Stephane Dion, the 52-year-old Liberal leader who would head the coalition government, spoke on television after Harper, saying the coalition was needed to help face the economic crisis.

Minority Government

Harper’s Conservatives went into the Oct. 14 election with 127 seats in Parliament and increased their total to 143, still short of the 155 needed to control the legislative agenda. The government needs support of at least one other party to pass legislation.

The crisis was sparked Nov. 27 when Finance Minister Jim Flaherty presented a fiscal update that included cuts to funding for political parties, limited civil servants’ right to strike and failed to offer a stimulus package to spur economic growth. The three opposition parties said they would oppose the plan and negotiated an alliance.

Harper, who has been prime minister for almost three years, has since backtracked on the political funding and labor rights. Harper and Jean met for about 2 hours this morning. Jean didn’t speak to reporters after the meeting.

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Greg Quinn in Ottawa at gquinn1@bloomberg.net.

Last Updated: December 4, 2008 12:34 EST