* Protests, strikes major test for PM Hun Sen
* Rights group condemns "extreme lethal force"
* Factory workers allied with political opposition
* Workers say cannot survive on salaries
Cambodian military police opened fire with assault rifles on Friday to quell a protest by stone-throwing garment factory workers demanding higher pay in a crackdown a human rights group said killed four people.
Chaos during nationwide strikes erupted for a second day as security forces were deployed to halt a demonstration by thousands of workers, who refused to move and threw bottles, stones and petrol bombs at an industrial zone in Phnom Penh.
The clash represents an escalation of a political crisis in Cambodia, where striking workers and anti-government protesters have come together in a loose movement led by the opposition Cambodia National Rescue Party (CNRP).
Unions representing disgruntled garment workers have joined opposition supporters protesting against the government of Prime Minister Hun Sen to demand a re-run of an election in July that the opposition says was rigged.
Military police confronting the protesters fired live ammunition, Reuters journalists said, and bullet casings were later seen scattered across the ground at the scene.
The clashes took place at Canadia Industrial Park in Phnom Penh, home to dozens of factories that make clothing for western brands that include Adidas, Puma and H&M Hennes & Mauritz.
Human rights group LICADHO described the incident as "horrific" and lambasted military police, adding that their own investigation and surveys of hospitals had found four people were killed and 21 wounded.
"We condemn this appalling use of extreme lethal force by security forces", the group's director, Naly Pilorge, said in a statement. "Security forces must now put an immediate end to the use of live ammunition against civilians."
Spokesmen for the national police and military police said they could not verify the number of casualties.
It followed a crackdown on Thursday outside a Yakjin (Cambodia) Inc factory in another part of the city, when armed troops struck demonstrators with batons, wounding 20 people. Yakjin is a maker of clothing for Gap and Walmart .
The CNRP, led by former finance minister Sam Rainsy, has courted some 350,000 garment workers from nearly 500 factories across the country by promising to nearly double the monthly minimum wage to $160 if it wins a re-run of the July election, which Hun Sen is refusing to hold.
CRISIS OVER WAGES
The opposition alleges 2.3 million of its votes were stolen to allow the ruling Cambodia People's Party (CPP) to return to office. The CPP won 68 seats in the election to the CNRP's 55, according to the National Election Committee, but the CNRP says the commission is one of many agencies under CPP influence.
The government is refusing to raise the wage beyond $100 dollars a month and has ordered factories to reopen to prevent damage and job losses in an industry worth $5 billion a year to what is one of the world's poorest countries.
Cheath Khemera, a senior labour officer at the Garment Manufacturers Association in Cambodia (GMAC) told Reuters it was too soon to assess the cost of the strikes, but he estimated each factory could be losing $20,000-$30,000 a day.
"This really impacts the industry seriously," he said.
Until this week, security forces had exercised restraint to try to cool tempers as pressure mounted on a government facing some of the biggest protests ever seen in Cambodia.
The strikes and rallies represent a rare challenge to the 28-year rule of Hun Sen, who has been credited with attracting investment and creating jobs in what was once a failed state scarred by war and the bloody 1970s Khmer Rouge era.
He has also earned a reputation for being intolerant of opposition and rights groups say abuses are common.
Hun Sen's rule was tested last year when a once weak opposition of various parties amalgamated and won votes from Cambodians upset by low wages, graft and a substantial number of forced evictions from farmland and city slums.
Garment manufacturing is Cambodia's biggest foreign currency earner, a major employer and a vital source of income for many rural families who complain they can barely survive on the wages that are lower than neighbouring Thailand and Vietnam.
Many western brands outsource footwear and apparel to Cambodian factories, in part because labour is cheaper than China.