BUDAPEST (Reuters) -- Hungary's Prime Minister Ferenc Gyurcsany apologized on Wednesday for a leaked speech in which he admitted lying about the parlous state of the economy to win April's election.

The leak of the profanity-littered tape triggered violent protests this month and calls for the government of Socialists and Free Democrats to quit. On the tape Gyurcsany said in May that "we lied in the morning, we lied in the evening".

"Of course I am sorry.... these were the words of reproof, affection and passion," Gyurcsany told a press conference.

Gyurcsany said he recognised he had lost the people's trust and it would take a long time to regain their confidence, but he insisted plans to cut the budget deficit, which is running at 10.1 percent of gross domestic product, must be implemented.

Since winning the election, the government has reversed tack on economic policy and introduced hefty tax rises and subsidy cuts to rein in the biggest deficit in the European Union.

"I did not believe that voters would understand ... In a sense I did not believe in myself either, that I would be able to tell all this," he said.

As a result of the deficit reduction measures, government popularity has plunged to 25 percent from around 40 percent in April and it faces a key test in Sunday's local elections.

The main opposition Fidesz party is portraying these as a referendum on the tax rises and subsidy cuts.

Under Hungary's constitution there is no means of changing the government outside of an election unless it resigns or loses four no-confidence votes, and the Socialists and Free Democrats have stood firmly behind Gyurcsany.

The number of protesters outside parliament had dwindled to around 100, mostly from fringe far right groups, by Wednesday morning from a peak of tens of thousands in the week after the leak of the tape on Sept 17.

Fidesz parliamentary faction leader Tibor Navracsics told a press conference on Wednesday that while Socialist MPs had known of the post-election austerity measures, voters had not.

"I ask him to apologize to the voters, including the left-wing voters who he lied to and kept secrets from, and I also ask him to apologize to the opposition and to parliament," Navracsics said.

Gyurcsany's reforms are the kind of policies that investors who finance Hungary's budget and current account deficits have been urging for years.

The government has won backing from the European Commission for its plans, which are aimed at getting the country into the euro zone for which a maximum budget deficit of three percent of GDP is required.

The forint sold off around two percent last week as a result of the protests and rioting by a small group of far right demonstrators, but has more than recovered those losses.