PRAGUE (Reuters) - The Czech Social Democratic Party (CSSD) picked former parliament speaker Jan Hamacek as their chairman on Sunday, bringing closer a possible breakthrough in forming a viable government.

Prime Minister Andrej Babis is still trying to find allies after his minority government lost a confidence vote in January, mainly because of allegations that he fraudulently claimed European Union subsidies worth 2 million euros a decade ago.

Babis has denied any wrongdoing, but almost all other parties have declined to cooperate with his ANO movement which has only 78 seats in the 200-strong lower chamber of parliament and thus needs partners to form a majority.

Hamacek, whose Social Democrats ruled in coalition with ANO and the Christian Democrats (KDU) from January 2014 until last December, won 272 votes at the CSSD congress, beating former regional government chief Jan Zimola, who got 224 votes.

He had said before the congress that party members should decide whether the CSSD with its 15 lawmakers joins a coalition with ANO or supports its minority government.

Hamacek said in a letter to party members that Babis should not be part of such a government. This could change if the only other option was to hold an early election, he said in an interview for www.idnes.cz news website.

Only the Communist party, with 15 lawmakers, has said it might lend Babis’ government external support, although the centre-right Mayors movement (STAN) said this week it could negotiate with ANO, something it had previously ruled out.

Analysts have said mainstream opposition parties might change their positions in order to prevent possible cooperation between ANO and the Communists or the far-right, anti-EU Freedom and Direct Democracy (SPD) party.