As investors around the world worried about Brazil's chances of avoiding a currency devaluation, the lower house of parliament threw out an opposition amendment to a long-delayed bill to plug huge losses in the pension system.

The government defeated the amendment comfortably, mustering 343 votes, 35 more than the three-fifths majority of 308 it needed, according to an official count.

The lower house was due to vote on another two opposition amendments. "A victory for us tonight will make it easier to approve the other measures (in the fiscal plan)," said Aecio Neves, the lower house leader of president Fernando Henrique Cardoso's Brazilian Social Democratic Party.

"Approval of the reform will above all help restore Brazil's credibility abroad," Neves told reporters.

The bill, stuck in Congress since 1995, seeks to introduceminimum retirement ages and link pensions to contributions to save an expected $15 billion over the next three years.

It also scraps perks for civil servants who have retired as young as 40, on pensions higher than their salary. Privileges like that have helped fuel a pension deficit set to pass $35 billion this year, more than double federal spending on health.

While tackling the pension deficit is crucial to Brazil's attempts to narrow its huge budget deficit, Wednesday's voting was also a key test of the government's ability to get its emergency austerity plan approved in Congress quickly.

The plan to save $84 billion over three years was unveiled last week in a bid to restore investor confidence in Brazil and stop it from following Russia and much of Asia into a devastating currency collapse that would send shockwaves around the world.

Much of the plan, including tax increases and cuts to the value of civil service pensions, must be approved in Congress.

Success for the government Wednesday wasalso likely to boost talks over a multibillion-dollar credit line with the International Monetary Fund to help fend off economic disaster.

Officials in Washington said Wednesday they were close to announcing an agreement of a loan package for Brazil, including cash from rich nations and worth at least $30 billion.

A full-blown currency crisis in Brazil could plunge much of Latin America into recession, possibly hurting the United States, which sends 20 per cent of its exports to the region, and economies elsewhere.

The pension reform bill has been a thorn in the side of the Brazilian government ever since it was sent to Congress in 1995 and has been bogged down by opposition from a powerful civil service lobby in parliament.

Although some key items have been lost, the bill is still seen as an essential first step towards tackling the budget deficit which is Brazil's fundamental economic problem.

Once the amendments have been voted, the bill can pass through its final, nonvoting stages in Congressand become law.