PRAGUE (Reuters) - The Czech government survived a vote of no confidence in parliament on Friday as expected, with the rightist opposition failing to topple Prime Minister Vladimir Spidla less than halfway through his four-year term.

The result comes as a relief to investors who have sat nervously watching the row, after having bet billions of dollars on the country's political and economic stability in the run-up to European Union entry next May.

The vote also opens the way for parliament to begin the third and final reading of a reform package consisting of spending cuts and tax changes aimed at bringing the public finance deficit down to four percent of GDP in 2006 from an expected 7.6 percent this year.

"Reforms can now, and must now continue," Spidla told journalists after the vote.

The opposition called the vote saying the reforms did not go far enough in slashing the deficit.

It needed 101 votes in the 200 seat parliament to defeat the center-left government, but mustered only 98, according to official results. One opposition MP was absent due to illness.

All but one of Spidla's MPs -- rebel Josef Hojdar -- voted in support of the government. Hojdar, who announced in the summer he was leaving the government to sit as an independent, abstained in the vote.

"We may have lost today, but the vote shows that this government has bigger problems. The coalition has the support of only 100 MPs am I am curious as to how it will deal with this," said opposition Civic Democrat MP Martin Kocourek.

The crown currency showed little reaction to the outcome, and analysts said the market had already built in the positive result. But, they added, the government still faces a tough road in getting the reforms through the lower house.

"The (confidence) vote was only one of several obstacles the government has to overcome, though it is one of the smaller ones," said Pavel Sobisek, an economist at HVB in Prague.

"Hojdar's voting shows he remains outside of the coalition and that is not good (for the reforms). But the government should carry through the reform even without him," he added.