* Interior minister says need to end misuse of law
* Says religious leader "a great friend"
* Condemns assassinations of governor and minister
By Myra MacDonald
LONDON, March 11 (Reuters) - Pakistani politicians should be able to reach a cross-party accord to end misuse of the blasphemy law, based on proposals made by the leader of a religious party, Pakistan's interior minister said on Friday.
The comments by Interior Minister Rehman Malik were the clearest sign yet of Pakistan's attempts to reduce tension over the blasphemy law, which has become a bitterly divisive issue that has highlighted the power of the religious right in Pakistani society.
Two senior politicians, Punjab Governor Salman Taseer and Minorities Minister Shahbaz Bhatti, were assassinated this year after they called for amendments to the blasphemy law, which critics say is often misused to settle personal scores.
Malik told Reuters in an interview party leaders would meet to try to reach a consensus on the law, as proposed by Maulana Fazl-ur-Rehman, head of the Jamiat-e-Ulema-e-Islam (JUI-F) religious party.
"Its misuse is being, of course, taken into account and the party leaders are going to sit together as proposed by Maulana Fazl-ur-Rehman ... and I hope this matter can be thrashed out, whenever this meeting takes pace," he said.
Fazl-ur-Rehman, a pro-Taliban cleric close to the ruling Pakistan People's Party (PPP), quit the government in December after a row over the sacking of one of his ministers. He has been a vocal defender of the blasphemy law.
However, Pakistan's Dawn newspaper quoted him as saying last week that "if a law is being misused against minorities, we are ready to discuss this".
Malik declined to answer a question on whether politicians would discuss amendments to the law, or simply introduce measures to prevent its misuse, saying this would be a collective decision and he would abide by the consensus.
Critics say the law is not only misused, including against minorities, but is also too vaguely worded to be fair. It provides for the death penalty for insulting the Prophet Mohammad.
Malik said Fazl-ur-Rehman's proposals would be likely to gain support, without giving details. "Everybody, I think will follow him in this connection."
Asked whether this meant the PPP had resolved its differences with him, Malik said, "he has always favoured and taken the side of the Pakistan People's Party ...
"He is a great friend of mine, he is a great friend of the president, he is a great lover of democracy so you can draw the inference that there is nothing wrong."
The PPP-led government has been accused of appeasing the religious right after Taseer was shot by his own bodyguard in Islamabad. The man who confessed to his killing was celebrated as a hero, and the religious right organised large protests to insist there could be no change to the blasphemy law.
The government responded by promising the laws would stand, while Malik was quoted by the Pakistani media as saying that if someone insulted the Prophet Mohammad, he, too, would shoot him.
Asked about that comment, Malik said, "Nobody would like to show disrespect to our Prophet. I said the bullet of law should be utilised for such actions. I was misinterpreted in that particular statement."
He said the government condemned the assassination of the two men. "Nobody has the right to take anybody's life."
The furore over the blasphemy law, which has stunned Pakistan's secular minority, has coincided with a row over CIA contractor Raymond Davis, who shot dead two Pakistanis in Lahore in January in what he says was an act of self-defence.
With Washington insisting Davis has diplomatic immunity, Pakistan has jailed him and asked courts to decide on his diplomatic status and on the substance of the case.
The case has led to a rise in anti-Americanism in Pakistan and caused tension with Washington.
Malik declined to comment on Davis on the grounds his case rested with the courts, but said he did not believe it should be allowed to affect relations with the United States.
"We should not make a big issue out of it. I think the U.S. must also realise that as we respect their laws and their courts then similarly let's wait for the decision from the court. Again I repeat that the matter is sub judice." (Editing by Andrew Dobbie)