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European Commission First Vice-President Frans Timmermans addresses a news conference at the EU Commission headquarters in Brussels, Belgium, May 4, 2016. REUTERS/Francois Lenoir

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By Gabriela Baczynska and Jakub Iglewski

BRUSSELS/WARSAW (Reuters) - The European Union gave Poland more time on Tuesday to settle a constitutional crisis, saying it was not about to escalate its unprecedented investigation into whether government policies were threatening the rule of law.

The EU executive Commission launched its inquiry after the government changed the way the constitutional court operates, something critics said undermined the tribunal's ability to uphold democratic checks and balances.

Last week, the Commission gave Warsaw until Monday to make substantial progress in addressing its concerns, threatening to pursue a procedure which could ultimately see Poland stripped of its voting rights in the EU - something never done before.

After meeting Prime Minister Beata Szydlo on Tuesday, however, Commission First Vice President Frans Timmermans said Poland should find its own solution to the crisis.

"I fully agree with the Polish prime minister when she says this is only a Polish problem and that we can only find a Polish solution," Timmermans told reporters in Warsaw.

Commission spokesman Margaritis Schinas said no formal decision on escalating the probe would be made right away.

Since coming to power in October, the right-wing Law and Justice party (PiS) has strengthened its grip on key institutions, including the secret services and public media.

It also enacted legislation increasing the number of constitutional court judges required to make rulings, changing the order in which cases are heard and rejecting court appointments made by the previous government.

The court itself has refused to implement the new rules.

The Commission has to tread a thin line between ensuring Warsaw does not breach the EU's democratic standards and avoiding souring relations with governments as the continent struggles with the migration crisis and awaits Britain's vote on whether to leave the 28-nation bloc.

Szydlo, who last week said in an emotional speech that she would "not yield to any ultimatum" from Brussels, said after Tuesday's talks with Timmermans that the government had proposed ways to make the constitutional tribunal operate transparently.

"The Polish government has proposed such solutions to the debate over the court which ... meet all the conditions to settle the conflict," she said.

Neither Warsaw nor Brussels announced any details about the talks that were largely aimed at calming the escalating spat.

"Actions speak louder than words. I look forward to the day when the (Polish) PM will present her compromise proposal to all political groups," Guy Verhofstadt, a Liberal member of the European Parliament, said in an emailed comment.

(Additional reporting by Marcin Goclowski in Warsaw, Writing by Gabriela Baczynska and Justyna Pawlak, Editing by Robin Pomeroy)

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