* Chaos reigns in rebel-held areas
* No consensus yet on whether to appoint a PM
* Opposition says initiatives must emerge from collective leadership
CAIRO, Feb 22 (Reuters) - Syrian opposition leaders renewed their efforts on Friday to form a provisional government to halt a slide into chaos in rebel-held areas, a day after insisting that any peace talks have to result in the removal of President Bashar al-Assad.
Almost two years after the national revolt against Assad broke out in southern Syria, the absence of a political leadership from swathes of land under rebel control has been a glaring weakness of Assad's foes, who have little control over Islamist brigades making advances on the ground.
"You have a situation developing where chaos reigns in liberated areas while, relatively, there is still fuel, electricity and basic services in the Assad-held regions," one diplomat in contact with the opposition said.
"If the situation persists like this popular support for the opposition will dwindle and they could lose the war," he added.
On the second day of meetings of the Syrian National Coalition, an umbrella group of political players in the opposition, members heard reports from members of a committee formed to help decide on the viability of a government and whether it could have enough financial and diplomatic support, according to sources at the meeting.
Opposition sources estimate several billion dollars is needed a month for a government to operate in rebel-held areas, mostly rural and desert regions estimated to comprise over half of Syrian territory.
The coalition's financial backing falls way short of that, the sources said, adding that Qatar, a main supporter of the revolt, this week pledged $100 million for humanitarian aid to be administered by the Assistance Coordination Unit, a non-partisan division of the coalition.
The opposition's failure to provide services, mounting reports of rebel indiscipline and looting in rebel-held areas have undermined public support for their cause.
Opposition brigades have wrested large swathes of Syria from the control of Assad's forces but the areas remain the target of army artillery, air strikes and, increasingly, missiles.
"Even if a government is not viable right now we should name a prime minister and let him start forming it to send a message to the people on the inside who are demanding one," a high-level coalition member said.
Another source said a block in the coalition that includes the Muslin Brotherhood, the only organised political force in the opposition, is against forming a government at this stage.
Opposition by the brotherhood helped scuttle an attempt backed by the coalition's secretary general Mustafa al-Sabbagh, a businessman with good links to the Gulf to name former Syrian premier Riad Hijab as prime minister at a meeting in Istanbul last month, the sources said.
Hijab, the highest defector to abandon Assad since the beginning of the revolt, does not have good ties with the brotherhood. But several liberals in the coalition also oppose him because was a long serving ruling Baath Party operative.
"Hijab has said the right things and is an administrator. He is qualified but his history in the regime plays against him. We could see a surprise name circulating by the end of tonight," the coalition member said.
Munther Makhos, a veteran opposition figure who fled Syria in the 1970s for his opposition to Assad's father, said a government needed an opposition force capable of keeping Assad's air force and long range weapons at bay to be able to operate in liberated regions.
"It does not make sense to form a government and present it as a present for the regime to target," said Makhos, a respected member of the coalition.
The meeting of the Western, Arab and Turkish-backed coalition began on Thursday before Syrian Foreign Minister Walid al-Moualem is due for talks in Moscow, one of Assad's last foreign allies.
One diplomat said that the coalition spent a long time debating a peace proposal that appeared to "be going nowhere" and it was time it got to the nutty gritty of governance, such as how to administer the newly pledged aid from Qatar and building an alternative administration.
Coalition president Moaz Alkhatib came under strong criticism from Islamist and liberal members alike for proposing talks with Assad's government without setting what they described as clear goals. The coalition adopted a political document that demands Assad's removal and trial for the bloodshed, members said.
A statement issued by the coalition said any political solution has to be based on "the removal of Bashar al-Assad and the heads of the military and security apparatus responsible for the decisions that led the country to this stage."
The statement said any future initiatives have to emanate from the 12-member collective leadership of the coalition.
(Reporting by Khaled Yacoub Oweis; Editing by Stephen Powell)