Iranian parliament rejects Ahmadinejad subsidy cut

* Parliament backs only half the savings sought by govt

* Lawmakers worry subsidy cuts will ignite inflation

* Budget assumes oil price of $65 a barrel

TEHRAN, March 9 (Reuters) - Iran's parliament on Tuesday blocked President Mahmoud Ahmadinejad's plan to phase out subsidies on food and energy by approving only half of the savings requested by the government, news agencies reported.

Parliament on Monday approved the outlines of Ahmadinejad's 2010/11 budget but some lawmakers warned planned cuts in subsidies could spark runaway inflation.

The government had proposed to raise $40 billion by cutting subsidies but parliament only approved half of that amount, the official IRNA news agency reported.

Before parliament's vote on Tuesday, Ahmadinejad met MPs to "convince them to vote in favor of his proposal," ISNA news agency reported, citing a lawmaker.

"President Ahmadinejad urged parliament to vote for the proposal and warned that if lawmakers do not vote in favor of it, the government might face problems cutting subsidies," ISNA quoted lawmaker Mousa Ghorbani as saying.