Communist deputies held the key to the survival of Portugal's [WORD ILLEGIBLE]-month-old minority Socialist goverment today after Parties to the right and the extreme left said they would vote "no" on a confidence motion.

Premier Mario Soares celebrated his 53rd birthday today as the 263 seat Assembly of the Republic wound up a two-day debate on whether the Socialists should continue their four year term and push through their stringent economic policies.

The confidence vote was expected early Saturday morning.

The pro-government evening newspaper A Lula quoted Soares as saying he did not think he could win "as things stood." He said he will reshuffle his Cabinet if he does win the vote, which occurs on the issue of the 1978 budget an austere economic plan that calls for reduction of a $1.2 billion deficit in the balance of payments by a third.

Soares has challenged the three major opposition parties to back his continued rule and renewed loan talks with the International Monetary Fund, or to find an alternative excluding the Socialists.

A smiling secretary-general of the Portuguese Communist party, Alvaro Cunhal, emerged from talks with President Antonio Ramalho Eanes yesterday to wish reporters a "happy democratic Christmas." Enigmatic as ever, however, he refused to say if his party's 40 deputies would join with the 102 Socialists in parliament to save the government.

Political observers said Soares' fighting challenge that he would make no concessions to the opposition to stay in power made it difficult for the Communists to vote with the government.

If the Communists abstain, the government would fall under the combined weight of the 73 center-right Social Democrat votes, the 41 of the conservative Center Democrats and the "no" vote of the sole member of the extreme left Popular Democratic Union.

There are also six independents in the assembly.

The conservative weekly O Tempo said that if the government was toppled, President Eanes would call on Soares to head a caretaker government of independent ministers.

Fresh elections can only be called after new electoral law legislation has been passed.

Three months would have to be allowed for campaigning.