* Supreme Court had ordered a vote for speaker's position
* Incumbent, Yuli Edelstein, resigned instead
* Vote could have led to anti-Netanyahu legislation
* Concern has been mounting in Israel over democracy slippage (Adds Likud comment)
By Jeffrey Heller
JERUSALEM, March 25 (Reuters) - The speaker of Israel's parliament, an ally of Prime Minister Benjamin Netanyahu, resigned on Wednesday, sharpening a battle with the Supreme Court over its concerns that democracy could be a casualty of the coronavirus crisis.
Yuli Edelstein's resignation could facilitate plans by the opposition to fast-track legislation that would bar Netanyahu, as an indicted suspect in three corruption cases, from forming a new government following Israel's March 2 election.
Edelstein, a member of Netanyahu's right-wing Likud party, announced he was quitting in a speech to parliament, accusing the court of "gross and arrogant meddling" in legislative affairs by ordering him to schedule a vote for the speaker's position at Wednesday's Knesset session..
In the showdown with the court, Likud rallied behind Edelstein even as parliament's legal adviser formally informed him he was violating the ruling, despite his resignation - noting it goes into effect only in 48 hours.
"We salute you, Yuli," Likud said on its Twitter feed.
With Netanyahu's opponents, led by Benny Gantz's centrist Blue and White party, holding a slim majority in parliament after the national election, Edelstein was likely to have lost his post if a vote had gone ahead.
Netanyahu, who has denied accusations of bribery, fraud and breach of trust, made no immediate comment on the loss of an ally who could have run interference in efforts by Blue and White to pass laws weakening his 11-year grip on power.
After announcing he was stepping down, Edelstein adjourned parliament until Monday. A civil liberties group, the Movement for Quality Government in Israel, said it would ask the Supreme Court to hold him in contempt.
Edelstein, a jailed dissident in the former Soviet Union, had cited the coronavirus crisis and pursuit of the Netanyahu's call for a "national emergency government" with Gantz for postponing a vote for the speaker's post.
In a ruling on Monday, Chief Justice Esther Hayut said Edelstein's reasoning "undercuts the foundations of the democratic process".
Edelstein's defiance of the court, the Israel Democracy Institute said after he announced he was quitting, was "bringing us dangerously close to anarchy". The group describes itself as non-partisan and dedicated to strengthening democracy in Israel.
Netanyahu currently heads a caretaker government and his critics have accused him of taking a turn towards autocracy during the coronavirus outbreak, an allegation he denies.
Citing social distancing requirements, the justice minister, a Netanyahu loyalist, limited judiciary sessions - a move that led to a two-month delay, to May, in the start of the prime minister's trial.
The government has also issued emergency regulations allowing the Shin Bet counter-terrorism agency to monitor cell phone location data to alert people who had been near coronavirus carriers.
(Additional reporting by Dan Williams; Editing by Maayan Lubell and Angus MacSwan)
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