Senior Turkish judges called proposed legal reforms unconstitutional Monday, fuelling fears of a clash between Prime Minister Tayyip Erdoğan's Islamic leaning government and the country's secular old elite.

Critics accuse the ruling AK Party, which has a huge majority in parliament, of using liberal reform as a cover for the encroachment of religious rule, and have threatened to take any changes to the constitution to the Constitutional Court.

The AK Party says the changes are needed to curb the powers of an entrenched judiciary and to bring Turkey closer to democratic norms needed to support the country's bid for EU membership. It also denies it has an Islamist agenda.

"We are trying to bring structures of the modern world to Turkey," Justice Minister Sadullah Ergin told journalists in Ankara.

Judge Hasan Gerceker, chief of the Supreme Court of Appeals, branded the reforms "unconstitutional" in remarks broadcast on the NTV news channel.

"The government should avoid actions that could damage the principles of separation of powers and independence of the judiciary," Judge Gerceker said.

The government has begun lobbying opposition parties for support and has warned that it could hold a referendum to push through reforms if it cannot muster the two-thirds majority needed for parliament to approve the reform package.

"Turkey cannot continue with this constitution," Deputy Prime Minister Cemil Cicek told reporters in Ankara. "These changes have to happen."

Investors are closely following developments, fearing they could increase political tensions and lead to early elections, due by July 2011.

Underlying investor's nervousness over the brewing trouble, the lira lost more than one percent in value against the dollar Monday, and bond yields rose. The benchmark share index, however, closed slightly stronger.

CIVIL COURTS FOR MILITARY

Another senior judge said the proposals "were not the answer to the problems of the judiciary."

"They are fooling around with the high court," said Kadir Ozbek, head of the Supreme Board of Judges and Prosecutors (HSYK), which appoints senior members of courts.

The government wants to change both the composition of the HSYK and change the way judges are appointed.

It also wants to make it harder to ban political parties, and pass responsibility to the president for appointing most of the Constitutional Court's judges.

The EU has criticised Turkey's political parties law, under which almost 20 parties have been banned since the constitution was adopted in 1982 following a coup.

The AK Party itself narrowly survived a court attempt in 2008 to close it down on the grounds that it contravened the country's secular constitution.

Gerceker singled out for criticism a proposed amendment that would make it harder to close down political parties.

He said making any decision to ban a party dependent on parliamentary approval was contrary to the principle of separation of powers.

"We sense that the constitutional package is aimed at decreasing the power of the judiciary. We are definitely objecting to this," Gerceker said.

The government also aims to curb the influence of the once-untouchable military, which along with the judiciary is a stronghold of secularism.

The proposals include a measure to allow military personnel to be put on trial in civilian courts for crimes committed against the security of the state and the constitutional order.

Dozens of officers, including retired and serving generals, have been charged in civilian courts in recent weeks in connection to alleged plots to unseat the AK government.

The government also proposed an amendment to strip leaders of the 1980 military coup of their immunity from prosecution.