Tunisia's ruling Islamist party is willing to go to referendum over whether to preserve transitional governance institutions, the party chief said on Monday, but he stood firm against secular opposition efforts to oust the government.

Rachid Ghannouchi said his Ennahda party was open to dialogue to modify Tunisia's political transition.

But he refused to consider removing the prime minister or dissolve a temporary Constituent Assembly, now weeks away from finishing a draft constitution and electoral law.

"If they are insistent on terminating the transitional process, we say to them, come, let's have a popular referendum," he told Reuters in an interview. "They raised their demands so high and now they're stuck in a tree."

Tunisia is facing its worst political crisis since protesters toppled autocratic ruler Zine El-Abidine Ben Ali in 2011, an uprising that sparked a wave of "Arab Spring" revolts across the region.

Neither the opposition nor Ennahda have shown any willingness to moderate their positions, though Ghannouchi said he was hopeful a solution to the deadlock would come soon.

Ghannouchi, 72, said he was open to most modifications through talks without preconditions from the opposition - even the controversial "Isolation Law", which aims to block former Ben Ali officials from political life for an as-yet unspecified period of time.

Many secular opposition groups reject the proposed law as illegal and also complain it would strengthen Ennahda's position in the political sphere.

"Cancelling or delaying it is all possible as long as it comes through dialogue with all blocs in the Constituent Assembly, because there are some that back the law," he said.

"Another possibility is to tighten it so that fewer people are included, or so the time period is shorter."

Ghannouchi said he was even willing to talk to the Nida Touns party, which has links to Ben Ali, and it was possible to include the party in a consensus government if agreed to in talks with all political blocs.

Tunisia was once held up as a democratic model for transitional Arab states. Now it is increasingly divided between supporters of the Ennahda-led government and backers of the secular opposition, angered by two assassinations in their ranks and emboldened by Egypt's army-backed ouster of its elected Islamist president.

The turmoil also comes at a time when Islamist militants are stepping up attacks across the country.

ENNAHDA FOES "INFILTRATE" MILITANTS

Ghannouchi spent 20 years in exile in Britain before returning to a hero's welcome in Tunisia after Ben Ali's ouster. Despite saying he was open to compromise, he gave an unforgiving view of the opposition's growing daily protest movement.

"They are a counter-revolution ... Our protests support the progress of the transition movement and their protests want to blow up the transition," he said.

Ennahda put on a show of force this weekend with more than 100,000 crowding into the central Kasbah Square on Saturday in one of the biggest protests since the 2011 revolution.

That has surely bolstered his moderate Islamist party's confidence in the face off against the opposition.

"The street cannot change an elected government, only a dictatorial one ... We'll accept correcting the transition path, but we won't accept an absurd and nihilistic one."

Ennahda accuses its rivals of offering no alternative beyond removing the government and transitional assembly.

Ghannouchi insists Ennahda will not meet the same fate as Islamists in Egypt. There, mass demonstrations against president Mohammed Mursi led to the army deposing and detaining him, as well as many Muslim Brotherhood leaders.

"We exported our revolution to Egypt, now they (the opposition) want to import a coup," Ghannouchi joked. "But in Egypt the opposition would have had to wait four years for change, whereas here they just have to wait a few months."

Tunisia's opposition often blames Ennahda of having a role in Islamist militant attacks such the assassination of two leftist political leaders in the past two months.

Tunis was hit by two bombs in the past two weeks, the first time the capital has seen such attacks. No one was hurt. Last Monday, militants killed eight soldiers in one of the deadliest attacks on Tunisian forces in decades.

At best, they argue, Ennahda was initially too soft on Salafist groups that it once hoped to woo to join its political bloc. Most hardline groups reject Ennahda's moderate stance.

Ghannouchi denied those critiques and condemned recent attacks in Tunisia. But he argued the incidents may be the work of Ennahda's foes keen to exploit fears of radical Salafists.

"These (militant) groups have been infiltrated by political elements from inside the country to hit Ennahda and democratic progress, employing men lacking in life experience or religious culture," he said.

"There are groups who benefit from destroying our legitimacy." - Reuters