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Demonstrators take part in a protest against Brazilian President Michel Temer and the latest corruption scandal to hit the country, in Brasilia, Brazil, May 24, 2017. REUTERS/Paulo Whitaker

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BRASILIA (Reuters) - Thousands of protesters gathered in the Brazilian capital on Wednesday to demand early elections to replace the scandal-hit government of President Michel Temer and demand that congress not pass his unpopular austerity policies.

Temer last week refused to resign in the face of new corruption allegations against him and his closest aides, putting his government and its reform agenda on the brink of collapse.

Unions and leftist parties opposed to Temer's labour and pension reforms called the Occupy Brasilia protests to press for his downfall.

The large crowd gathered by midday near Brasilia's Mané Garrincha soccer stadium and more were expected to join them as they march down towards Congress.

Riot police set up cordons around the modernistic Congress building where lawmakers met to discuss a post-Temer transition should the president resign or be ousted by one of Brazil's top courts. If that happens, Congress would have 30 days to pick a successor to lead Brazil until elections late next year.

The parties of Temer's main allies are split over whether to quit his coalition immediately or first agree on a consensus figure to replace him and save the agenda of reforms that are considered vital to restore business credibility and investment needed to end a two-year recession.

Outside, the message demonstrators chanted was clear: "Out with Temer!, general election now!"

The unions were galvanized by opposition to a bill that cuts their power in the workplace by allowing temporary non-unionized contracts and ending obligatory payment of union dues.

"Temer can't stay and these reforms that trample on our rights cannot advance. We want direct elections now," said Dorivaldo Fernandes, 56, member of a health workers union in the neighbouring state of Goisas.

He said a president chosen by Congress was not acceptable. "We want new people who are clean and can clean up this mess."

Leftist senators, who on Tuesday succeeded in obstructing discussion of the labour reform bill, read out a constitutional amendment in committee that would allow early general elections instead of waiting until October 2018, but chances of changing the constitution in the midst of a political crisis were minimal.

One of its backers, Senator Randolfe Rodrigues, leader of the Socialist Popular Action party, said Temer's base of support in Congress was falling apart.

"His coalition is distancing itself from Temer because it knows that this is a dying government. The next step is to mobilise support for elections on the streets."

(Reporting by Alonso Solto and Anthony Boadle; Writing by Anthony Boadle; Editing by James Dalgleish)

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