UPDATE 1-Belgian finance minister to step down over bank dispute

(Adds confirmation from ministry, details)

BRUSSELS, March 5 (Reuters) - Belgium's Finance Minister Steven Vanackere is stepping down following a dispute over financial relations between a Belgian bank and a workers' organisation linked to his political party, a finance ministry spokeswoman said on Tuesday.

Vanackere had decided to quit after a disagreement over financial arrangements between state-owned Belfius, which is the former retail banking arm of stricken Franco-Belgian group Dexia , and the ACW group close to his Christian Democratic party.

"It is because of the allegations of the past weeks, which are difficult to combine with carrying out his office," the ministry spokeswoman said.

Vanackere became finance minister in December 2011, having served as foreign minister for two years.

It was not immediately clear when he would leave office, or who would take over the reins of the ministry.

Belgium's government is expected to start negotiations this month on adjusting its austerity programme. Economic growth has slowed down by more than previously expected and the coalition government needs to change its economic plans if it is to reach a deficit target of 2.15 percent of GDP this year.

(Reporting by Robert-Jan Bartunek and Ben Deighton, editing by Rex Merrifield)