Ferenc Gyurcsany has in the past 18 months endured riots, demonstrations, calls for early elections and relentless criticism of his reform programme. Doctors, students and pensioners have all protested against him. The conservative opposition Fidesz party is implacably opposed to him. Even MPs in his own Socialist grouping are angry with him.

To many Hungarians, the 46-year-old prime minister is simply a liar – a man who blighted his return to office last year by admitting he had lied “morning, noon and night” about the budget to win the elections.

But Mr Gyurcsany will not give ground. He says: “Politicians have caused a lot of trouble [in Hungary], by watching the opinion polls. I saw that it was time to change and I hope that at the end of this period of governing Hungary, most of the people will say: ‘Oh, it was very challenging, but finally you were right, you had to go through this period.’ The final judgment is in the hands of the voters.”

If Mr Gyurcsany has his way that will not be before 2010, when the next parliamentary elections are due. But Fidesz, which is far ahead of the Socialists in the opinion polls, wants snap elections as soon as next year – and is trying to organise a referendum on the prime minister’s unpopular education and healthcare reforms. Mr Gyurscany may survive this challenge – but he will still face the threat that his own party will want him out of office well before 2010.

Kristian Szabados, director of Political Capital, a politicalconsultancy, says: “Gyurcsany was elected to be a reformer and expected to be a reformer. But he lost credibility and now the voters see confusion and chaos.”

Hungary’s political difficulties predate Mr Gyurcsany and are rooted in the deep divide between the ex-Communist Socialists and the anti-Communist Fidesz which goes back to the legacy of the 1956 Uprising.

Viktor Orban, Fidesz’s mercurial leader, was angry when he lost power to a Socialist-led coalition in 2002 and even angrier when he failed to return to office in the April 2006 election. Mr Gyurcsany, who replaced the dispirited Peter Medgyessy as prime minister in 2004, savoured victory, renewed the coalition with the liberal Free Democrats and promised change.

In June 2006, he announced the “Gyurcsany package” of austerity measures to cut the fiscal deficit with tax rises and spending cuts and pledged further reforms. But his credibility was hit when, in September, tapes emerged of a speech to Socialist leaders in which he admitted lying to win the election.

The country was shaken by demonstrations in central Budapest demanding Mr Gyurcsany’s resignation and, in October, Fidesz scored a landslide win in local elections.

But with strong backing from the Free Democrats, Mr Gyurcsany stuck to his programme, including introducing student fees and healthcare charges. He wants to overhaul local government and plans pension reforms.

But he is dogged by credibility questions. The latest doubts have been prompted by scandals involving the diversion of state funds by district-level Socialist officials. Mr Gyurcsany says: “If I had really been involved, yes, it would have been a challenge ([to my credibility].” He pledges to take legal action against organisations that misuse state funds.

The corruption cases are grist to Fidesz’s mill. The party wants early elections to be preceded, possibly, by a technocratic government. Fidesz is collecting the 200,000 signatures needed to organise its planned referendum. The real aim is to force out Mr Gyurcsany. Tibor Navracsics, Fidesz parliamentary leader, argues that, when Fidesz was in power, Hungary figured among the region’s most successful countries. “Now it’s the most unsuccessful.”

But Mr Gyurcsany’s supporters argue that Fidesz has no plan beyond regaining power. It has vague promises to scrap the health charges, cut taxes and “discipline” public spending. It does not detail how it would avoid painful spending cuts.

It is also unclear how strongly Fidesz members still support Mr Orban. He dominated Hungarian politics in the 1990s, both as prime minister and opposition leader, but he is increasingly seen as too divisive a figure to win wavering voters. He faces no immediate challengers, though.

Meanwhile, the Free Democrats see themselves as a small reformist force punching above its weight. Janos Koka, the economy minister and party president, wants to increase the Free Democrat vote from 5 per cent last year to 10 per cent. He is resigning as minister in December to focus on party politics. He says: “I would like to be an effective third party in parliament. Hungary needs liberal ideas.”