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UPDATE 2-VW labour chief backs new CEO Diess to steer overhaul

* Works council boss Osterloh says conflict long laid to rest

* Says job security and profitability equally important

* Labour representatives back plans for trucks division -Osterloh (Adds Osterloh comments, share price, background)

FRANKFURT, April 13 (Reuters) - Volkswagen's top labour representative has backed the company's management shake-up, signalling that new CEO Herbert Diess could face less resistance in his efforts to revamp Europe's biggest carmaker than in his previous role.

Diess was appointed late on Thursday to succeed ousted group chief Matthias Mueller as part of an overhaul that includes the streamlining of VW's multiple car brands into three groups while preparing its truck business for a potential listing.

"We are convinced that, with Diess, we have the right man on board," works council chief Bernd Osterloh said in a letter to employees on Friday.

Osterloh's comments come after repeated clashes over Diess's drive to cut costs and improve profits at the carmaker's core VW brand, where Diess was handed the reins only three months before the Dieselgate emissions scandal erupted.

The labour chief had accused Diess of betraying workers and trying to use the emissions scandal as a pretext for pushing through job cuts.

"Back then, we were not immediately on the same page," Osterloh said in his letter. "But, as is well known, that issue was laid to rest a long time ago."

Osterloh and Diess struck a deal in November 2016 on cost savings and job cuts through natural attrition, and on Friday Osterloh said job security and profitability were now equally important at the company.

The planned group overhaul is Volkswagen's biggest revamp since it became a multi-brand conglomerate under former CEO Ferdinand Piech, a grandson of VW Beetle designer Ferdinand Porsche.

Osterloh said that labour representatives also back Volkswagen's decision to prepare its truck and bus division for "capital market readiness" by making it a public limited company.

"The works councils of Scania and MAN support this next step because it continues the work done so far," he said.

Shares in Volkswagen rose 0.8 percent to 178.04 euros by 0800 GMT, against a 0.5 percent rise for the STOXX 600 automotive index. (Reporting by Maria Sheahan Editing by David Goodman)