ANKARA: Turkish Prime Minister Recep Tayyip Erdogan offered Friday to freeze key parts of a controversial justice reform bill in an apparent climbdown in the face of widespread opposition.

The compromise was welcomed by the main opposition party, which had warned the legislation would threaten the independence of the judiciary.

The row has added to the deep political turmoil in Turkey, which has spread to financial markets with the lira again hitting all-time lows on Friday.

Erdogan said ahead of an expected late-night vote in parliament that the legislation relating to the Supreme Board of Judges and Prosecutors (HSYK) would be suspended.

While other articles of the bill would be voted on, Erdogan said he had now agreed to “freeze the part on the Supreme Board of Judges and Prosecutors so that we can make progress because the elections are nearing”.

However, the ultimate fate of the bill was not immediately clear as Erdogan also said it was “out of the question” that the reforms would be withdrawn completely.

The legislation aims to invest more powers in the justice minister and give the government a greater say over the appointment of judges and prosecutors.

The European Union, which Turkey has long sought to join, along with rights groups and the opposition had warned that the measures could threaten the independence of state institutions and undermine democracy.

The leader of the main opposition Republican People's Party, Kemal Kilicdaroglu, welcomed Erdogan's statement as a “very right decision” and a “democratic gain” for Turkey.

The move came a day after lawmakers again came to blows during a parliamentary debate on the bill.

The government has moved to curb the judiciary in the wake of a massive corruption scandal that has ensnared several key business and political allies of Erdogan.

It accuses supporters of influential Muslim preacher Fethullah Gulen in the police and judiciary of acting as a “parallel state” and instigating the graft probe to try to topple the government ahead of key elections this year.

The embattled Erdogan has retaliated by sacking hundreds of police and prosecutors running the investigation and vowed to rid the state from what he described as a “tumor” and a “virus”, referring to the so-called Gulenists.

The political crisis has severely dented Turkey's image as a model of democracy and stability in a volatile neighbourhood and raised concerns about the future of its economy.

In the wake of the probe, Erdogan has also spoken in favour of possible retrials for hundreds of military officials jailed for coup plotting, in a move seen as a dramatic turnaround to bring the military on his side in his fight against Gulen.

A Turkish court however rejected Friday a retrial request by dozens of people including former army chiefs, lawyers and journalists convicted in 2012 over an alleged coup plot against Erdogan's AKP government.

PM accuses business leader of 'treason'

The combative Erdogan went on the attack again Friday, accusing the country's leading business group of treason after its boss warned that global investors might flee because of the political crisis.

“Without shame, they say global investors would not come to Turkey... It is a treason against this country,” Erdogan said, referring to the Turkish Industrialists' and Businessmen's Association (TUSIAD).

The Turkish lira dived through the key barrier of 2.3 to the dollar despite a massive central bank intervention on foreign exchange markets on Thursday.

It has lost over 10 per cent since mid-December in turmoil not seen since the 2000-2001 financial meltdown, and economists forecast that further falls are on the cards.

But Deputy Prime Minister Ali Babacan dismissed the concerns and said the volatility was only “temporary” and that the government was taking steps “to mitigate the political risk”.