* Government says will proceed with reforms
PRAGUE, June 16 (Reuters) - Czech transport unions shut down the Prague underground for the first time in its history and halted the railway system on Thursday in the widest strike so far in protest against the centre-right's fiscal reforms.
The unions, which launched the one day strike, also called for the government's resignation over its plans to raise the retirement age, hike taxes and limit welfare benefits.
"This strike is happening because social dialogue failed, because the government is not willing to negotiate on the union's proposals aimed to protect the mid and low-income workers," Lubos Pomajbik, head of the public transport union, told a rally in the capital Prague.
Labour protests are rare in the central European country that has become one of the richest of the 10 ex-communist nations that joined the European Union seven years ago. The last big strike halted the railway for several days in 1997.
The three-party governing coalition has launched plans to overhaul the country's welfare and health systems to better cope with a rapidly ageing population and balance the budget by 2016.
The moves have mostly won approval from the investment community but the unions say the workers will be forced to pay for the changes.
Less than a year after taking power, the reforms along with a series of corruption scandals and constant infighting have sunk the ruling parties in polls. One poll this month found 90 percent of those asked were unhappy with the government.
Prime Minister Petr Necas has said reforms will not be halted but has offered to discuss them.
Opinion polls have shown that the majority of the population supported the strike. However some found it annoying.
"The strike is bad for the country, the economy. I believe public transport workers are not doing so bad in Prague," said Vera Skalnikova, 26, who took a Vltava river boat to work, usually a past-time for tourists rather than commuter service. (Reporting by Robert Mueller; editing by Elizabeth Piper)
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