Iceland is holding an election in which voters are expected to reject the party blamed for allowing a financial catastrophe that has brought the country to its knees.

Opinion polls are predicting that Saturday's general election will give the Social Democratic party a clear win over the conservative Independence party, which had been in power for 18 years.

The Independence party resigned in January amid widespread protests over the economic crisis that forced Iceland to seek assistance from the International Monetary Fund.

The left-wing Social Democrats formed a caretaker government in coalition with the Left-Green party and called the early election.

The election is also expected to give a chance to the Civil Movement, a party formed at the height of the financial crisis.

Three surveys published on Friday showed the Social Democrats, led by Johanna Sigurdardottir, the prime minister, winning about 30 per cent of voter sympathies.

The Left-Green party is expected to get 24.1 to 27.2 per cent of votes.

Economic impact

Polls suggest voters will give the Independence party its worst electoral showing since its 1987 score of 27 per cent.

About 228,000 people are eligible to vote. Polls open at 9am (09:00 GMT) and close at 10pm, with final results expected early on Sunday.

Iceland's reliance on the financial sector has had a devastating impact; thousands of people have lost their savings and their jobs.

Icelanders had enjoyed a standard of living envied by the rest of Europe, but since the onset of the crisis the state has had to take control of three major banks. The currency, the Icelandic krona, has plunged.

EU membership

Sigurdardottir supports joining the European Union and adopting the euro.

She says EU membership would shelter the island nation from global economic turbulence.

"EU membership application is a priority issue for the Social Democrats," she said on Friday.

"It is necessary to achieve stability."

But the Left-Greens are opposed but agree that debate on the issue is needed.