By Maria Carolina Marcello and Silvio Cascione

BRASILIA (Reuters) - Pro-impeachment lawmakers chanted "Dilma Out" in the lower house of Brazil's Congress on Friday, as it opened a raucous three-day debate on whether to impeach President Dilma Rousseff on charges of breaking budget laws.

Pro-government demonstrators took to the streets in several states amid fears of violence as the debate began. Major trade unions and landless peasant movements planned bigger, nationwide protests on Sunday, when the debate is set to culminate with a vote that Rousseff is widely expected to lose.

The government lost a last-ditch appeal on Thursday before the Supreme Court to halt the impeachment process, which could bring further instability or even chaos to Latin America's largest economy after 13 years of rule by the leftist Workers' Party.

Rousseff is accused of manipulating budget accounts in 2014 to secure her re-election.

She has strongly rejected the accusation and planned to appeal to Brazilians in a televised speech on Friday night. But the increasingly isolated leader canceled the broadcast after an opposition party sought a court injunction to block it, arguing that she was unfairly using resources of the Brazilian state to defend herself.

Rousseff is fighting to survive a political storm fueled by Brazil's worst recession since the Great Depression in the 1930s and a spiraling corruption scandal that has reached her inner circle.

In a further blow for the president, Minister for Cities Gilberto Kassab resigned his post late on Friday, according to two sources familiar with matter. His Brazil Social Democratic Party (PSD) split from the government on Wednesday and said it would vote for Rousseff's impeachment.

Police stepped up security in the Brazilian capital where a half-mile-long (1 km) metal fence has been erected on the grass esplanade opposite Congress to avoid clashes between rival demonstrators expected to turn out by the tens of thousands over the weekend.

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In Rio de Janeiro, police said they plan to form a cordon on the Copacabana beachfront avenue to separate the pro-impeachment crowd from Rousseff supporters.

"I am very worried that there will be violence, depending on the result of the vote and the number of people who gather in Brasilia," said Congressman Rogerio Rosso, who chaired the lower house committee that backed Rousseff's impeachment.

The country's top network TV Globo plans to broadcast Sunday's critical roll-call vote from beginning to end, starting at 2 p.m. (1700 GMT), which analysts said will add pressure on lawmakers to vote for impeachment.

Polls show that roughly two-thirds of Brazilians support impeachment.

"VIOLENT ACT"

As opposition congressmen called for Rousseff's ouster, Attorney General José Eduardo Cardozo addressed Congress in her defense, calling the impeachment process a "violent act with no parallel against democracy."

"History will never forgive those who broke with democracy," Cardozo said, as ruling lawmakers shouted: "There won't be a coup."

While the budget violations alleged against Rousseff are serious, she has not been directly implicated in the kickback scandal engulfing state-run oil company Petrobras, though her opponents say that bribe money was used to fund her election campaigns.

The move to impeach her, after months of political deadlock, is widely seen as a vote of no-confidence in a leader blamed for turning once-booming Brazil into the worst performer among the world's major economies.

Support for unseating Rousseff has gained momentum in recent weeks, with the defection of parties from her ruling coalition.

Nineteen of the 25 parties with seats in the lower house now back impeachment, the Brasilia-based consultancy Arko Advice said on Friday. They will deliver at least 350 votes and maybe 370, exceeding the two-thirds majority in the 513-seat house needed to send impeachment to the Senate, it said.

Former Justice Minister Miguel Reale Jr., a leading supporter of impeachment, opened Friday's debate by saying the process to oust Rousseff reflected the will of the people. "She was extremely irresponsible and knocked out the country," he said.

If her impeachment is approved by the lower house, the Senate must then vote on whether to go ahead with putting Rousseff on trial for disobeying budget laws.

If the Senate approved a trial, in a vote that would likely take place on May 11, Rousseff would automatically be suspended and replaced by Vice President Michel Temer.

Temer, who would serve out Rousseff's term until 2018 if she is ousted by the Senate, has little popular support. He would face a daunting task restoring confidence in a country where dozens of political leaders, including his close associates, are under investigation for corruption.

Temer is considering the chairman of Goldman Sachs in Brazil, Paulo Leme, and the founder of asset manager Maua Capital, Luiz Fernando Figueiredo, as candidates to join his economic team should he take over the presidency in coming weeks, two people familiar with the matter told Reuters on Friday.

(Writing by Daniel Flynn and Anthony Boadle; Editing by W Simon and Tom Brown)