* Presidential ally says time for government shake-up
* Algeria wary Arab uprisings could spread
* Opposition planning protest at weekend
By Lamine Chikhi
ALGIERS, Feb 7 (Reuters) - A prominent member of Algeria's ruling elite said on Monday it was time for a shake-up of the government, a rare criticism from inside the establishment and a sign that uprisings around the Arab world are increasing pressure for change.
President Abdelaziz Bouteflika, seeking to stop protests in Egypt and Tunisia spreading to his energy exporting country, promised last week to create new jobs, allow more democratic freedoms, and lift a 19-year-old state of emergency. [ID:nLDE71228E]
But that has failed to appease a coalition of civil society groups, some trade unions and small political parties who -- inspired by protests elsewhere in the Arab world -- plan to defy a ban and hold a protest march in the capital on Feb. 12.
Zohra Drif Bitat, a vice-president of Algeria's upper house of parliament who was appointed by Bouteflika, launched a scathing attack on the government, saying it had been unable to translate huge energy wealth into a better life for ordinary people.
"Are we going to continue to tackle our problems with the same actors who have failed? Don't we need new blood?" she said on state radio.
"I hope and expect a radical change in the mode of governance," she said.
There were local media reports last week that Bouteflika was preparing to reshuffle his government, and possibly fire Prime Minister Ahmed Ouyahia, but this has not been confirmed by any officials.
RULING ELITE
Drif Bitat's words carry weight because she is at the heart of Algeria's ruling elite, which was forged in the 1954-62 war for independence from France.
She is a veteran of the war and her late husband, Rabah Bitat, was one of a six-strong underground committee which launched the liberation struggle, earning him iconic status among Algerians for whom the fight against France was a defining moment.
Drif Bitat expressed scepticism about a government programme to spend ${esc.dollar}286 billion by 2014 to modernize the economy and build new infrastructure.
"We are given figures ... an avalanche of figures, but the results on the ground don't reflect what has been spent. Why?" she said in an interview with the Chaine 3 radio station.
She praised Bouteflika's promise to lift the state of emergency in the near future, and echoed allegations from the opposition that it had been exploited to restrict political freedoms.
"This is the first time in our country and in the Arab world that a president is responding to the peoples' demands," she said.
"Governments have manipulated the state of emergency which has had a negative impact on political activity in the country."
An Egyptian-style revolt in Algeria could have far-reaching economic implications because the country is a major oil and gas exporter which is also fighting an al Qaeda insurgency.
However, analysts say a popular uprising is unlikely because the government can draw on energy revenues to buy off most grievances.
One of the organisers of the planned Feb. 12 protest said piecemeal reforms by the authorities were not enough.
"Algeria needs a revolution, not just the lifting of the state of emergency," said Hocine Zehouane, the chairman of the Algerian League for Human Rights.
"Bouteflika's decision (to lift the state of emergency) is a non-event. We need to rebuild our institutions, we need a transitional phase of 18 months, and free and fair presidential and legislative elections," he told Reuters.
The planned protest is not supported by Algeria's main trade unions or the biggest opposition forces -- the FFS party and Islamist parties which were banned in the early 1990s but which still retain some influence. (Editing by Giles Elgood)
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