By Karolina Tagaris

ATHENS (Reuters) - Greece's government ordered striking transport staff back to work on Thursday, threatening them with arrest if they refuse to end an eight-day walkout that has paralyzed the Athens subway.

Workers said they would defy the order, issued under emergency legislation the conservative-led government invoked for the first time since taking power in June.

The strike is the latest test for Greece's fragile coalition as it tries to take on powerful unions and implement an austerity program demanded by foreign lenders as the price for bailout funds.

"Neither the government nor society can be held hostage to union mentality," Development Minister Kostis Hatzidakis said after a nearly five-hour meeting with Prime Minister Antonis Samaras.

"The government can't ignore this. There is nothing else we can do," he said.

But in a sign of the coalition's fragility, the move was criticized from within its own ranks as the smallest party in the three-party government called it "extreme".

"At a time when society is under such pressure, every option to reach an agreement must be exhausted first," the Democratic Left party said in a statement. "Being uncompromising - on both sides - does not help."

When the same emergency law was invoked against truck drivers in 2010, workers obeyed the order to return to work after a week-long strike that had disrupted fuel supplies and emptied gas stations.

But the subway workers were defiant and other unions voiced their support.

"We will not back down, we will resist," one union leader, Antonis Stamatopoulos, told Reuters after addressing workers at a subway station in the working-class neighborhood of Sepolia.

Subway workers, who have defied a court order to return to work, oppose being included in a unified wage scheme for public sector workers that would slash their salaries.

"It's not that subway workers went crazy over the last eight days. We exhausted every possibility before going on strike. We've reached our limits. We've run out of patience," said Manthos Tsakos, general secretary of the metro workers' union.

TAKING ADVANTAGE

Greeks - inured to daily strikes - were in sour mood on Thursday, with some complaining that their daily commute time had tripled and that they were being forced to pay for costly taxi rides.

"The workers are taking advantage of their union power while the ordinary commuter, who is unprotected, is being punished," said Antonis Demetriadis, 40, who works in a marketing company.

"Who is going to protect me? Would they care if my pay is cut?"

Bus, railways workers and seafarers said they would walk off the job in the coming days in solidarity with subway workers as major unions expressed their support.

Greece's largest private and public labor unions GSEE and ADEDY, representing about 2 million workers, said they would hold a 24-hour strike in February to protest the government's belt-tightening policies.

"This government is out of control," said ADEDY General Secretary Ilias Iliopoulos. "Taking decisions that are usually taken in extreme political situations is absurd, especially in a country that gave birth to democracy."

Greece, kept afloat solely by foreign aid, averted financial collapse in December when its euro zone partners agreed to keep funds flowing but insisted on unpopular reforms that have driven up unemployment to record levels.

A public fed up with waves of tax hikes and salary cuts has taken to the streets in often violent protests.

(Additional reporting by Renee Maltezou and George Georgiopoulos; Editing by Deepa Babington and Robin Pomeroy)