* Mursi says vote could begin in October
* Delay gives breathing room for IMF deal
* In blow to Mursi, court overturns his decision on prosecutor
Egyptian President Mohamed Mursi said on Wednesday parliamentary elections could be delayed until October, a postponement that would give his cash-strapped government breathing room to negotiate an IMF deal.
Mursi's original plan was for a four-stage election that would start in late April and put a parliament in place by July.
But the schedule was turned on its head this month when a court cancelled the presidential decree setting the dates.
"Perhaps the elections will be held in the coming October," state news agency MENA quoted Mursi as saying.
He expected the lower house to convene by the end of the year. It will take two and a half months to complete a new election law and another two months to prepare for the vote.
The postponement removes one source of friction between Mursi and the secular-minded opposition that had planned to boycott the vote, saying the election law had been drawn up to suit Mursi's Muslim Brotherhood and other Islamists.
But other points of tension remain that will complicate his efforts to build the political consensus seen as necessary for passing an IMF deal that will involve austerity measures to curb the state's unaffordable subsidy bill.
This week, the opposition accused Mursi of instigating a crackdown on dissidents when the prosecutor general ordered the arrest of five prominent bloggers accused of inciting violence against the Brotherhood.
In a blow to Mursi, an appeals court ordered the Justice Ministry to reinstate the former prosecutor general, a Hosni Mubarak-era appointee who was sacked by Mursi in November.
Mursi and the Brotherhood have been the focus of protests that have often turned violent, obstructing his efforts to revive an economy hit by two years of instability since Mubarak was deposed.
With Egypt facing shortages of imported fuel and its wheat stocks dwindling, the IMF loan is seen as vital to plugging the budget deficit and supporting foreign currency reserves that have dropped below the level needed for three months of imports.
The government has said it expects an IMF technical mission to arrive soon to complete negotiations on the agreement.
The IMF, however, has not given a date. The planning minister said last week he expected a deal and payment of the first tranche of the loan by the end of June.