Sudan's Bashir names long-time ally and general prime minister

(Adds details on Saleh, background)

By Khalid Abdelaziz

KHARTOUM, March 1 (Reuters) - Sudanese President Omar Hassan al-Bashir named his first vice president and long-time ally Hassan Saleh to the newly created post of prime minister on Wednesday, the clearest sign yet that he intends for him to one day take over.

It is the first time Sudan has had a prime minister since Bashir came to power in a 1989 Islamist and military-backed coup. Saleh is the last member of the group of officers that launched the coup to remain at Bashir's side.

"The party leadership meeting chaired by President Bashir approved the nomination of Hassan Saleh as prime minister and his retention of the post of first vice president," said ruling National Congress Party Deputy Leader Ibrahim Mahmoud.

Saleh will be sworn in on Thursday and immediately start negotiations on forming a new cabinet, Mahmoud said.

Sudan's constitution was amended in December to introduce the position of prime minister, a demand of opposition parties that took part in a national dialogue with the government, with the aim of distributing some of the presidency's extensive powers.

Bashir agreed to the proposal but reserved most executive authority for himself. Saleh is now seen as the strongest contender to succeed Bashir if he keeps his promise of not running for re-election in 2020.

Bashir has undergone heart surgery in recent weeks, raising questions over who would succeed him. While leading an Islamist party, Bashir also has the military's loyalty as a one-time officer which strengthens his position and raises doubts over a civilian succeeding him, especially as conflicts between government forces and various armed rebel groups go on.

Saleh, a retired army general, is a former defence, interior and presidential affairs minister. He currently serves as first vice president and National Congress Party deputy leader for executive affairs.

Bashir's long war against various rebel groups coincides with a severe economic downturn. This year's budget foresees a growing deficit and slower growth.

Sudan's economic problems have been building since the south seceded in 2011, taking with it three-quarters of oil output, the main source of foreign currency and government income.

Bashir is wanted for war crimes by the International Criminal Court in The Hague.

(Writing by Ahmed Aboulenein; Editing by Janet Lawrence)