By Johan Ahlander and Simon Johnson

STOCKHOLM (Reuters) - A Swedish anti-immigration party is likely to score its best ever general election result this month, as a growing number of voters question the cost of the country's open door asylum policy.

Opinion polls show that a majority in Sweden, where 16 percent of the population is foreign-born, still backs the liberal regime which over the decades has welcomed refugees from Chile and Yugoslavia to Somalia and Syria.

An absolute political consensus in support of the policy, however, is no more in a nation divided over record numbers of asylum seekers as Sweden's cradle-to-grave welfare system comes under strain.

A decade ago questioning the policy of granting refuge to those fleeing oppression and war was almost taboo, even though a sizeable number of Swedes have long believed that it is too lenient. Now high unemployment, declining welfare and worsening standards in schools have helped to put the debate center stage in the election campaign.

In August, center-right Prime Minister Fredrik Reinfeldt, facing defeat in the Sept. 14 vote, broke an unwritten rule among mainstream parties of supporting the policy unreservedly. The cost of receiving new asylum seekers, he said, would leave little room for more spending on boosting jobs and improving schools.

"The Prime Minister has confirmed it - the election is a choice between mass immigration and welfare. You choose on Sept. 14," Jimmie Akesson, leader of the anti-immigration Sweden Democrats, immediately tweeted after Reinfeldt's speech.

Opinion polls give the Sweden Democrats around 10 percent support - almost double their showing four years ago - and they could become the third biggest party in parliament behind the favorites, the center-left Social Democrats, and Reinfeldt's struggling Moderates.

A study by the SOM Institute at Gothenburg University shows that many voters have doubts about the asylum policy. It found that around 44 percent believe the country should take fewer refugees. That figure has been largely stable in recent years, although it is down from around 65 percent in 1992 when Sweden was suffering a financial crisis.

Story continues

Mainstream parties have excluded any form of cooperation with the Sweden Democrats, but a strong result may make it hard for anyone to form a stable government without their support.

The rise of the far-right has polarized a society that has long been proud of its peaceful and consensus-led politics. Last year skinheads attacked a peaceful demonstration against racism, leaving around 30 people injured and two people stab wounds.

Police arrested 28 neo-Nazis and tens of thousands of Swedes took to the streets the following weekend to protest against extreme-right violence.

CHURCHES SOUND WARNING

On Saturday, a massive police presence greeted around 10,000 who turned out in central Stockholm in a counter-demonstration against an election rally staged by around 100 members of the extreme right Party of the Swedes.

"Immigration costs are enormous and it is the Swedish people who have to pay," Party of the Swedes leader Stefan Jacobsson, told Reuters at the rally.

The demonstrations passed off peacefully, but emotions were running high. "We are here to make a statement against Nazis and racists," said Jenny, 24, a protester from the small town of Enkoping, 80 km (50 miles) northwest of the capital.

Churches rang their bells in a symbolic warning during the extreme-right rally. "We are doing this to demonstrate the inviolable worth of all people at a time when it is being questioned," read a sign on the door of St Jacob's church in Stockholm's shopping district.

Asylum seekers, mainly fleeing the civil war in Syria, will cost the government an extra 48 billion Swedish crowns ($7 billion) over four years, a 50 percent rise on previous estimates. Costs for new arrivals - including housing, language lessons and a welfare allowance - totaled 1.5 percent of the country's 921 billion crown budget in 2013.

At the same time Swedes have been shocked by reports of school standards slipping to the levels of poor, ex-communist European Union nations across the Baltic Sea, and of malnutrition among the some of the elderly.

"What is fundamental now is that we lower the cost of immigration," Akesson, who wants to slash arrivals by 90 percent, told Reuters. "Sooner or later you cross a line when it simply does not work anymore and I think that the line was crossed a long time ago."

The far-right has been making gains across Europe as economic downturn has left millions without jobs, but in relatively prosperous and traditionally liberal Sweden the change in mood is particularly noticeable.

Social Democrat leader Stefan Lovfen, a strong supporter of the open door policy and the man likely to be next prime minister, said the far right is playing on Swedes' fears.

"When you have lots of people unemployed and they don't know how they are going to get by ... clearly people are going to be worried," he said. "Then you have a party that points to a group of people and says if they weren't here everything would be fine. It is easy to accept that simple explanation if you are afraid."

INTEGRATION FAILURES

Other Nordic countries have similar trend. In Norway, the populist Progress Party is in power for the first time while the anti-immigration Danish People's Party has become the country's biggest group in the European Parliament.

Sweden opened its doors to Chileans fleeing right-wing dictatorship in the 1970s, Iraqis escaping Saddam Hussein's brutality in the 1980s, people driven out during the violent break up of Yugoslavia in 1990s and now refugees from Syria.

But integration failures have left many immigrants on the margins of Swedish society. Unemployment among young immigrants is more than double the national average.

In August, torched cars in the immigrant-dominated Stockholm suburb of Rinkeby provided a small-scale reminder of riots in 2013 that gave the Sweden Democrats a platform for their message that the open door policy isn't working.

One Rinkeby resident, who spoke to Reuters as people streamed out of the local mosque after Friday prayers, said the troublemakers were not representative of the community. "They're just young hooligans causing trouble for no reason," said the resident, who declined to be named.

Asked if the latest violence would provide a boost for the Sweden Democrats, he said: "Definitely. They're already over ten percent, and this will help them further. It certainly won't help the people here."

About 36,000 Syrians have sought asylum in Sweden since an uprising against President Bashar al-Assad began in 2011. Sweden stands out in Europe for giving Syrians asylum seekers automatic residency.

Relative to its size, Sweden has received more asylum applications than any other European country over the last 12 months and the Migration Board reckons around 80,000 people will apply this year, up from around 54,000 in 2013.

"Sweden is a peaceful country. We can build a future here," said Eid, 33, from Damascus. Sitting in a comfortable hostel for refugees in a Stockholm suburb, Eid said he had traveled through Turkey, Greece, France and Germany to get to Sweden.

Formed in the late 1980s by former members of far-right organizations, the Sweden Democrats have moved closer to the mainstream since Akesson took over as leader in 2005. He has softened the party's stance, including introducing a zero tolerance policy on racism.

"There was consensus among mainstream political parties that we should have generous immigration policies," Magnus Blomgren, associate professor of political science at Umea University said. "Now you have a party that says 'we don't think this is right', and as a voter you have a chance to make a choice."

The party has been hit by scandals - its economic spokesman quit parliament after a video showed him using racist language and wielding a metal bar after a night out in Stockholm.

But after breaking into parliament for the first time in 2010, winning 20 seats and 5.7 percent of the votes, the party is set to do even better this time.

Swedish liberals worry about what happened in Denmark when the Danish People's Party held the balance of power until elections in 2011, pushing policies including tightening border controls that fueled tension with other European nations.

(1 US dollar = 6.9549 Swedish crown)

(Additional reporting by Philip O'Connor; Editing by Alistair Scrutton and David Stamp)