* Saudi women should be allowed to drive, senior prince says
* Royal family is facing calls for change
By Ulf Laessing
RIYADH, March 9 (Reuters) - A senior Saudi prince questioned the need for a ban on women driving on Wednesday and said lifting it would be a quick first step to reduce the Islamic kingdom's dependence on millions of foreign workers.
The Gulf Arab state is a monarchy ruled by the al-Saud family in alliance with clerics from the strict Wahhabi school of Islam. Women must be covered from head to toe in public and are not allowed to drive.
But the ruling family has been facing calls from activists and liberals, empowered by protests across North Africa and the Middle East, to allow some political reforms in the absolute monarchy that has no parliament.
Using social media, activists have called on King Abdullah to allow women to participate for the first time in municipal elections expected later this year.
Prince Alwaleed bin Talal, a nephew of King Abdullah and advocate of his reforms, said the kingdom could send some 750,000 foreign drivers home if women could drive.
"A lot of Saudi women want to drive their car in line with strict regulations and wearing a headscarf. But now they need a driver ... This is an additional burden on households," he said.
"The Saudi society wants fewer foreign labourers ... so why the hesitation, why this hesitation (with women driving cars)? I want answers," he said.
A ban could only be lifted by the government in consultation with the country's top Islamic scholars.
Saudi women are subject to a male "guardianship" system which requires they show permission from their guardian -- father, brother or husband -- to travel or, sometimes, work.
Religious police patrol the streets regularly to ensure gender segregation and that women are dressed modestly.
The rulers of the world's top oil exporter have wrestled with the issue of moderating the country's strict adherence to an austere version of Sunni Islam.
King Abdullah, a reformist, has replaced hardline clerics with moderate ones but must balance their needs with those of the religious elite who helped found the kingdom in 1932.
He unveiled handouts worth $37 billion last month in a bid to insulate the kingdom from Arab protests reaching the kingdom's borders in Bahrain, Yemen and Jordan, but has given no hint whether the ruling family will allow political reforms.
Saudi Arabia's huge oil wealth has provided a high standard of living compared to many neighbours, and it was widely thought to be immune from spreading unrest, but the rumblings of discontent from the Shi'ite minority have alarmed Riyadh.
More than 17,000 people have backed a call on Facebook to hold two demonstrations this month, the first on March 11 but activists say it is impossible to say how many will defy a ban on protests.
Protests by a disgruntled Shi'ite minority in Bahrain are being closely watched in Saudi Arabia, where Shi'ites make up about 15 percent of the population.
Reporting by Ulf Laessing; Editing by Elizabath Fullerton