* Luzhkov ups stakes in battle over his future
* PM Putin stays silent on future of powerful mayor
MOSCOW, Sept 14 (Reuters) - Moscow's powerful and long-ruling mayor flatly denied allegations of nepotism by state-controlled media on Tuesday, upping the stakes in a battle with the Kremlin over who runs Russia's most important city.
Yuri Luzhkov, one of the most prominent politicians in post-Soviet Russia, has guaranteed a majority for the ruling party in Moscow since 1992 but his future was thrown into doubt last week after President Dmitry Medvedev broke a taboo by openly criticising him.
Just hours after Medvedev suggested on Friday that Luzhkov should join the opposition if he was unhappy about Kremlin decisions, state-controlled media aired scathing reports about allegations of corruption and mismanagement in the capital.
The reports, which analysts say could not have run without the sanction of top Kremlin officials, were unprecedented in a country where the ruling elite normally keeps its internal fights carefully hidden from public view.
"It is mad, it is filth, it is a mess aimed at influencing the mayor," Luzhkov, 73, told Russian television channel REN TV when asked about the reports of corruption on state television.
Ruling Moscow, a city of 10.5 million, is one of the most important jobs in Russia. Reports have circulated for some time that Putin and Medvedev wanted to move Luzhkov but were holding back because of the difficulty in choosing a successor.
"This job is one of the most coveted within the public service and who gets it will tell a lot about the balance of power and political objectives of the country's leadership," Moscow investment bank VTB Capital said in a note to clients.
Analysts saw the critical television reports as a clear signal that Luzhkov and his second wife, billionaire construction magnate Yelena Baturina, had fallen out of favour.
When asked by REN TV if his wife could have become Russia's richest woman if she had not been married to him, Luzhkov said:
"My wife is an amazingly talented person. Everybody who has come into contact with her can confirm this. She would be an even richer person if she had not been the mayor's wife."
Putin, Russia's paramount ruler, has made no comment on Luzhkov's future since the row began, indicating there could be different views about whether Luzhkov should be ousted before his current term expires in June 2011. Russia's constitution allows the president to oust the mayor with a decree.
When Medvedev last month criticised Luzhkov for travelling abroad as peat-fire smoke choked the capital, Putin met the mayor and praised him for a timely return.
Russia is set to hold parliamentary elections in December 2011, followed by a presidential election in March 2012 which Putin has hinted he may use to return to the Kremlin.
Luzhkov's supporters say he presided over a construction boom that has turned the formerly drab Soviet capital into a vibrant metropolis. Detractors charge he has failed to deal with graft or choking traffic jams and has allowed many of Moscow's best historic buildings to be destroyed by developers.
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