By Jon Herskovitz

JOHANNESBURG, Aug 29 (Reuters) - A powerful South African
labour leader threatened at the weekend to withdraw support for
President Jacob Zuma's African National Congress, altering a
long alliance strained by a nearly three-week-old strike.

Adding to the pressure on the government, a union
representing tyre makers announced a strike for higher wages
from Monday. Thousands of armed forces unionised members are
also thinking of striking.

The government and unions have opened a new round of wage
negotiations to end the dispute that has shut schools and
prevented treatment of the sick, broadcaster eNews reported
unnamed sources as saying.

This month's strike by about 1.3 million state workers,
including teachers, nurses, customs officers and government
clerks has presented Zuma with one of his most serious
challenges since taking office more than a year ago.

Unions, also upset by alleged corruption in the ANC, are
trying to link the labour action to Zuma's political fortunes.

"We will not make a mistake again of voting into power our
worst political butchers," COSATU Secretary-General Zwelinzima
Vavi said at a rally on Saturday.

The comments, refering to ANC candidates for local elections
next year, were broadcast nationwide on Sunday.

Vavi later told Reuters that his group still supported South
Africa's president: "There is no problem with Zuma. We interact
with him all the time."

Vavi last week said the alliance with the ANC was
dysfunctional and in danger of collapse.. But COSATU spokesman
Patrick Craven said he did not see a breakdown coming.

"We are no where near the stage ... of withdrawing our
support for the ANC," Craven told Reuters.

COSATU helped Zuma win the presidency and its support is
essential if he wants to seek re-election. Vavi last week said
the alliance with the ANC forged in the struggle to end
apartheid was on the verge of rupture.

COSATU has already threatened to widen the state workers'
strike later this week to all of its member unions who it says
represent about 2 million workers.

A one-day strike set for Thursday will probably not do much
economic damage but COSATU has said the action could turn into
an indefinite strike, which would cause major damage in
industries including mining, which alone is responsible for
about 5 to 6 percent of GDP.

Analysts expect Zuma and the ANC government, which has
typically given in to labour's demands, to reach a deal soon,
tilted in favour of the unions, and worry later about the damage
to state spending.

ANC MEETING

"It wouldn't surprise me if there was some sort of
resolution by the end of the week," labour analyst Tony Healy
told Talk Radio 702.

An expanded strike would add to worries about prospects for
growth after the economy slowed more than expected in the second
quarter of 2010 as mining contracted and manufacturing expanded
at a slower pace.

The government has said it cannot afford the state workers'
demand of an 8.6 percent wage rise, more than double the
inflation rate, and 1,000 rand ($135.8) a month as a housing
allowance. It has offered 7 percent and 700 rand.

Any agreement to end the dispute is likely to swell state
spending by about 1 to 2 percent, forcing the government to find
new funds just as it tries to bring down a deficit totalling 6.7
percent of gross domestic product.

"Put simply, government will be borrowing money to pay wages
and debt service costs. This is not only unsustainable but will
require future generations to pay for our current spending,"
government spokesman Themba Maseko said in a report.

Bond, stock and rand trading have mostly been unaffected by
the strike but market players said that could change if there is
no deal by the end of the week and if the strike widens to
industries which could hurt local shares and dent sentiment.
(Editing by Jon Boyle)