By Renee Maltezou and Karolina Tagaris
ATHENS (Reuters) - Greece approved a reform bill on Thursday to secure further bailout funds from its international lenders but Prime Minister Alexis Tsipras' parliamentary majority shrank to just two seats after two dissenting lawmakers were expelled.
The bill, outlining regulation on tax arrears and home foreclosures, paves the way for the disbursement of 2 billion euros (916 million pounds) to pay state arrears and a further 10 billion euro to recapitalise Greece's top four banks.
The reforms were agreed by Tsipras' government and its lenders on Tuesday after weeks of negotiations and are key for it to complete the first review of a new aid programme worth up to 86 billion euros which Greece signed up to this summer.
However the defections of Nikos Nikolopoulos of the right-wing Independent Greeks party and Stathis Panagoulis of Tsipras' Syriza party further weakened the left-right coalition.
Nikolopoulos voted against the bailout bill, while Panagoulis abstained. Both were expelled from the ruling coalition's parliamentary group, meaning the government can now count on 153 votes in the 300-seat chamber.
That is exactly the number of "yes" votes obtained by the bill on Thursday.
A senior government official said the government was determined to carry on implementing the bailout programme.
The bill approved on Thursday provides foreclosure protection for primary homes to about 60 percent of mortgages among an estimated 400,000 homeowners whose loans have soured during the financial crisis.
About a quarter of them - families with incomes below the poverty line - were accorded full protection from foreclosure. The rest were given protection for a three-year period provided they restructured their debts with their banks.
The issue has been a major sticking point in talks with lenders. Tsipras had told Greeks no one would seize their homes.
"I refuse to throw onto the street borrowers fighting for their lives, leaving them to the mercy of the banks that became richer during the years of corruption," Panagoulis, a leftist, said in a statement as parliament voted.
Dozens of people protested in central Athens on Thursday.
"The government had said they would not confiscate a single home but today they crushed all our rights," said Giorgos Tzifonios, a retired steelmaker who was demonstrating outside the Bank of Greece.
Earlier on Thursday, leftist lawmaker and former government spokesman Gabriel Sakellaridis resigned from parliament saying he could no longer support the bailout measures. However, his resignation will have no impact on the government's parliamentary majority since he was replaced by State Reform Minister Christoforos Vernardakis.
Talks between the government and its lenders will continue in Athens through Friday on an additional set of reforms. Athens has said it wants to complete the first bailout review swiftly, to start negotiations on debt relief.
(Additional reporting by Gina Kalovyrna, editing by Silvia Aloisi/Ruth Pitchford)