By Tamim Elyan and Marwa Awad
CAIRO, Dec 12 (Reuters) - Egypt's liberal and secular opposition said on Wednesday it would back a "no" vote in a referendum on a divisive new constitution promoted by Islamist President Mohamed Mursi, calling off a boycott as long as safeguards are in place for a fair vote.
The army called off "unity" talks involving rival factions, dealing a blow to efforts to resolve a worsening political crisis over the referendum and rein in street protests that have turned violent.
The latest convulsion in Egypt's transition to democracy was brought on by a decree last month from Mursi in which he awarded himself sweeping powers to push through the new constitution, a necessary prelude to parliamentary elections early next year.
Mursi's move caused huge controversy, dividing the Arab world's most populous state and bringing thousands of pro- and anti-government protesters onto the streets in the worst upheaval since the fall of Hosni Mubarak almost two years ago.
The unrest has so far claimed seven lives in clashes between the Islamist Muslim Brotherhood and the opposition. The army has yet to use force to keep protesters away from the presidential palace, now ringed with tanks, barbed wire and concrete barricades.
Egyptians abroad began voting at embassies in the referendum on the new basic law that Mursi fast-tracked through an Islamist-dominated drafting assembly. The start of the voting process was a setback for the opposition, which had hoped to delay the plebiscite.
The absence of a boycott could help ease confrontation on the streets and give the charter more legitimacy if it passes.
The main opposition coalition says the draft constitution does not reflect the aspirations of all of Egypt's 83 million people because of provisions which could give Muslim clerics a role in shaping laws. It wants a new charter with more safeguards for minority rights, including for the 10 percent of Egyptians who are Christian.
Mursi's supporters say the constitution is needed to continue the transition to democracy. Some deride their opponents as Mubarak-era "remnants" trying to cling to power.
"We will vote 'no'," opposition politician and former Arab League chief Amr Moussa told Reuters.
The opposition said that unless the referendum is held with full supervision by the judiciary, security guarantees and local and international monitoring, it would still call for a boycott. It also wants the vote held on one day rather than two.
Leftist Hamdeen Sabahy of the Popular Front said: "The Front decided to call on the people to take part in the referendum and reject this draft constitution and vote no.
"If these guarantees aren't in place by the day of the referendum on Saturday, we will withdraw from it."
The army's attempt to arrange talks appears to have foundered because of suggestions it was taking on a political role. Defence Minister Abdel Fattah al-Sisi, who is also head of the armed forces, said on Tuesday he wanted talks which would not be political in character.
"We will sit together as Egyptians," he said.
But an army official told Reuters on Wednesday that the event had been called off because of the "media hype" that erupted implying that the minister was calling for national dialogue, a politically loaded phrase.
"The army cannot steer the political process and will not be dragged back into politics," the official said.
Presidency sources said Mursi, who had been expected to attend, had decided to send the head of the ruling party instead.
The army dominated Egypt throughout the post-colonial era, providing every president from its ranks until Mubarak was overthrown last year. After his election in June, Mursi shunted aside generals who had held interim power after Mubarak, and appointed a new high command.
Islamists have won parliamentary and presidential elections since the fall of Mubarak. They want the vote on the new constitution to go ahead and are confident it will pass, paving the way for them to win a new parliamentary election next year.
The opposition had argued that the chaotic protests and counter-protests of the last two weeks meant the referendum should be postponed. But large opposition rallies this week did not change Mursi's mind.
State media said the two-day voting plan had been adopted because many of the judges needed to oversee the vote were staying away in protest at the decision to hold the referendum. Voting therefore had to be staggered to move around those judges willing to cooperate.