* Lull in protests as leaders hold talks on crisis
* Sharif's position boosted by strong parliament support
* Pakistan in political turmoil since mid-August (Adds opposition quotes on talks)
By Maria Golovnina and Syed Raza Hassan
ISLAMABAD, Sept 3 (Reuters) - Pakistan's protest leaders demanding Prime Minister Nawaz Sharif's resignation prepared to resume talks with the government on Wednesday, reviving hopes for a negotiated solution to a crisis that has shaken the coup-prone nation.
Protests turned deadly last weekend, with thousands trying to storm Sharif's house, in an outburst of violence which has prompted fears that the country's powerful army might intervene and even topple Sharif.
But by Wednesday tension has significantly eased, with only a couple of thousand of hard-core supporters camping out peacefully outside parliament in the high-security Red Zone area in the centre of the capital, Islamabad.
After weeks of deadlock, early signs have emerged that protest leaders Imran Khan, a former cricket star, and Tahir ul-Qadri, a firebrand Sufi cleric, were inching closer to trying to find a negotiated solution to end the confrontation.
"We have put all our demands in front of the opposition jirga (mediating team)," said Raheeq Abbasi, Qadri's right-hand man, adding that his camp would then hold a separate meeting with government representatives later in the evening.
"If the jirga thinks that any of our demands are in violation of Pakistan's constitution, law and democracy, then we would be willing to let go of that demand."
Khan's camp was also expected to follow suit and present its demands to the mediating team.
Yet, with both Qadri and Khan still adamant on their demand that Sharif step down, it was unclear what kind of face-saving solution the talks might bring that would suit all the parties and help avoid further confrontation or violence.
Chaotic scenes in the usually quiet capital have alarmed many people in a nation where power has often changed hands though military coups rather than elections, with some officials accusing the military of orchestrating the unrest as a way of sidelining or even ousting Sharif.
The army has denied it was meddling in civilian affairs, saying it was neutral and calling for a political resolution.
The crisis has taken many turns since protests broke out in mid-August, subsiding at times only to flare up again in violence, with most commentators saying it was too early to say whether a negotiated solution was in sight.
Few commentators think the army is bent on seizing power again but even if Sharif survives, he would emerge significantly weakened and likely play second-fiddle to the army on key security and foreign policy issues.
'WHERE DO WE GO?'
As the crisis dragged on through its third week, Sharif sought to boost his standing by convening a week-long emergency joint session of parliament where he enjoys a solid majority, and the chamber has rallied behind the embattled prime minister.
The assembly saw chaotic scenes, however, on Wednesday as a lawmaker representing Khan's party took the floor to lay out opposition demands, with a sombre-looking Sharif making a show of walking out just before the speech.
Khan and Qadri have accused Sharif of rigging last year's election and have demanded a complete overhaul of the electoral system.
"This is a deadlock, where do we go from here?" vice chairman of Khan's PTI party, Shah Mehmood Qureshi, asked the chamber. "We are here today because of the impasse ... We are protesting to save parliament, not to destroy it."
Sharif served two terms as prime minister in the 1990s before being ousted in a 1999 coup. He won an election last year but has been at odds with the army since returning to office in Pakistan's first democratic transition of power.
He annoyed the generals by calling for better ties with old rival India as well as resisting an army plan for an offensive against Pakistani Taliban insurgents. The army has long jealously protected main foreign relations and security as its areas of responsibility.
The treason trial of a former army chief and president, Pervez Musharraf, who launched the 1999 coup, has also angered the military.
Sharif has yet to speak at this week's parliament session.
Just outside the assembly, the protest site was quiet, with activists resting on the grass or sleeping in tents.
But the centre of the capital remained paralysed, with many streets blocked by police. Some residents were alarmed by the emergence of checkpoints staffed by protesters wielding clubs on the central street leading to main government buildings. (Editing by Robert Birsel)