Iceland's Prime Minister said on Saturday that a new Icesave debt repayment deal from Britain and the Netherlands would considerably ease the island nation's financial burden, state radio reported.

The two European countries have offered new terms for repaying more than $5 billion lost by savers during Iceland's financial crisis, potentially heading off a politically risky referendum on the Icesave debt crisis.

I believe this is something we could work with, Prime Minister Johanna Sigurdardottir said in comments posted on the web site of Iceland's state radio.

The new proposal would mean considerably easing the payment burden on Iceland, she added.

The Icelandic government will respond to Britain and the Netherlands with its assessment of the new proposal within the next two days following a meeting between party leaders on Saturday, the radio reported on its web site.

The main feature of the plan is a floating interest rate designed to ease Iceland's burden as it repays $5 billion to the two European Union countries, a source familiar with the situation said on Friday.

The offer maintains other elements of a deal the three sides agreed in October, including full debt repayment and a seven-year grace period, the source told Reuters.

Iceland owes Britain and the Netherlands more than $5 billion lost by savers when Icelandic bank Landsbanki collapsed in late 2008. The British and Dutch governments reimbursed their citizens, and now they want their money back.

Iceland has been pushing for a new deal with the two European nations after its president refused to sign a repayment plan which was approved by parliament in December, triggering a public vote on the divisive issue.

Opinion polls indicate that Icelanders will reject the Icesave deal in a March 6 referendum.

A rejection of the bill would further damage Iceland's standing with capital markets and could be interpreted as a vote of no confidence in the government and cause a political crisis.

(Reporting by Omar Valdimarsson; Editing by Michael Roddy)

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