UPDATE 2-Italian PM blasts immigration-"obsessive" Salvini as League's election bid falters

* PM Conte accuses Salvini of disloyalty, exploiting migrant issue

* Possible 5-Star/PD deal to sideline Salvini

* Top League official says party "risks looking stupid"

* 5-Star says not interested in new deal with League (Adds Salvini comment)

By Gavin Jones

ROME, Aug 15 (Reuters) - Italian Prime Minister Giuseppe Conte on Thursday accused his far-right interior minister, Matteo Salvini, of disloyalty and being obsessed with blocking immigration, intensifying the open warfare in the ruling coalition.

The renewed political turmoil threatens to derail preparations for the 2020 budget in the autumn, as Italy attempts to rein in its huge public debt, the highest in the 19-nation bloc after Greece's.

Conte, who does not belong to any party, used the case of a migrant rescue boat refused entry to Italy's ports by Salvini as an opportunity to settle scores with the leader of the co-ruling League party, which last week put forward a motion of no-confidence in his government.

In the shock move, which seemed aimed at capitalising on his popularity, Salvini said his alliance with the anti-establishment 5-Star Movement was no longer workable and called for a new election that could see him crowned prime minister.

However, the gambit has not gone to plan.

5-Star and the opposition Democratic Party (PD) have stalled any debate of the League's no-confidence motion and many of their politicians are now openly discussing forming a coalition among themselves to sideline Salvini.

The 5-Star Movement has been hurt by its tie-up with the League, halving its voter support since the two parties joined forces in June last year, according to opinion polls. The League has overtaken it to become Italy's most popular party.

In an open letter to Salvini, Conte said he had convinced six EU states to take in the migrants aboard the Open Arms charity ship and accused him of "disloyal collaboration" by misrepresenting Conte's own position.

Conte said Salvini aimed to exploit the immigration issue for electoral gain rather than seeking solutions with Italy's partners.

"I understand your faithful and obsessive concentration on addressing the issue of immigration by reducing it to the formula of 'closed ports'. You are a political leader and you are legitimately intent on constantly increasing your support ...," he wrote.

Salvini shot back at a news conference outside the southern Italian city Caserta.

"Yes, I am guilty of having an obsession with the safety of Italian citizens, and an obsession with fighting human traffickers and NGOs who are accomplices to human traffickers. Sixty million Italians pay my salary for this obsession."

PD DEAL?

With the prospect of a 5-Star/PD government looking increasingly plausible, the League's Agriculture Minister Gian Marco Centinaio said on Wednesday he did not rule out trying to patch things up with 5-Star.

"I would never close the door completely," he said in a radio interview.

Salvini said on Wednesday the League "will do whatever we can to prevent a trickster's deal between 5-Star and the PD".

But in a hard-hitting Facebook post on Thursday, 5-Star leader Luigi Di Maio said there was no turning back after Salvini's move to pull the plug on the coalition.

"Now he regrets it, but the damage is done. Everyone creates their own destiny. Good luck!," Di Maio wrote.

League Cabinet Undersecretary Giancarlo Giorgetti, Salvini's closest aide, acknowledged in an interview in La Repubblica daily on Thursday that the party could now end up in opposition.

"We could have held on to our government posts and now we risk looking stupid, but we posed a political issue," Giorgetti said, referring to the policy gridlock which had bogged down the government amid constant bickering between the two parties.

Salvini, who has dominated Italian politics over the last year thanks to his "man-of-the-people" persona and popular hard-line on immigration, now seems in difficulty and less determined to bring down the government.

In a television interview with Sky Italia on Thursday he said Italy needed a new election "or constructive ministers." Some observers interpreted the remark that he would be happy to settle for a reshuffle in the euro zone's third largest economy.

However, many 5-Star politicians now seem more tempted by a deal with the PD. Lower house deputy Giuseppe Brescia said on Thursday it would be "absurd" to try to resurrect the coalition after the League had unilaterally tried to sink it. (Reporting by Gavin Jones; Editing by Andrew Cawthorne and Alison Williams)