By Jussi Rosendahl and Tuomas Forsell
HELSINKI (Reuters) - Jussi Halla-aho, a member of the European Parliament and an anti-immigration hardliner, confirmed on Monday he would run for the leadership of the Finns party, setting up a contest that could bring down Finland's coalition government.
Halla-aho, who has said Finland would be better off outside the EU, joins the race to replace foreign minister Timo Soini, who is stepping down from the party helm after 20 years.
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In a video statement published on Monday, Halla-aho said the party leadership "must better reflect the needs of the people who vote for us".
"Finland cannot be a global social office, where everyone has the right to walk in, expect to be taken care of and make arrogant demands," he said.
Formerly known as True Finns, his party became known for attempting to frustrate the sovereign bailouts that helped end the euro zone's debt crisis.
Currently the second-biggest party in parliament, it joined the government in 2015, angering many of its voters by accepting compromises on public spending cuts and backing a Greek bailout.
It currently ranks fifth in the polls with support of about 9 percent.
Halla-aho, who was fined by the Supreme Court in 2012 for blog comments which linked Islam to paedophilia and Somalis to theft, is one of two frontrunners in the race to lead the Finns. The other, Sampo Terho, is seen as a more moderate candidate.
"Ever since the Finns Party moderated its stance ... Finland has lacked an extreme alternative in a sense most other European countries currently have," Nordea analyst Jan von Gerich said in a note. "This could easily change, if Mr Halla-aho becomes the leader... it would be very difficult for the Finns Party to continue in the government."
As an MEP, Halla-aho has proposed sanctions against organizations that rescue refugees and immigrants from the Mediterranean, saying it encourages movement from Africa to Europe.
In his video-message on Monday, he said he did not know what would happen to the government if he was elected party leader.
The center-right government's austerity drive has prompted strikes and demonstrations and it is struggling to implement complicated reforms to healthcare and local government.
If a new coalition had to be formed, "the reform process of Finland would slow down at best, or stall completely at worst," von Gerich said.
(Editing by Catherine Evans)