TORONTO - Ontario's New Democrats are backing off one of their key budget demands in the hopes of brokering a deal with the minority Liberals before a looming vote that could topple the government and send voters back to the polls.

NDP Leader Andrea Horwath announced Thursday that she's withdrawing her demand to remove the provincial portion of the HST from home heating bills -- one of her party's most cherished policies.

It was clear that Premier Dalton McGuinty "wouldn't go there" even though he needs her party's support next Tuesday to avoid another election, Horwath said.

"It's not easy to say that I don't believe that the government's prepared to make life more affordable for everyday folks by taking the HST off home heating -- I think that's the wrong decision," she said.

"I'm hopeful that at some point, Mr. McGuinty will see the light of day and realize that is the right thing to do. It's just real obvious to me that he's not prepared to do that within the next couple of days."

Now it's time for the premier to reciprocate and accept one or more of the NDP's other proposals -- namely, hiking taxes for the rich, Horwath said.

The NDP want to introduce a two percentage point surtax on incomes over $500,000, an idea that public opinion polls suggest is popular with voters. Even billionaire investor Warren Buffet has advocated for similar reforms in the United States, saying he's effectively taxed at a lower rate than his secretary.

But it puts McGuinty in an awkward position after vowing not to hike taxes to eliminate a $15.2-billion deficit. It would also remind voters that he broke his promise not to raise taxes within months of becoming premier in 2003.

McGuinty needs to make clear once and for all whether he'll put millionaires ahead of hard-working families, Horwath said.

The premier was absent from the legislature, leaving deputy premier Dwight Duncan in the hot seat.

The finance minister wouldn't say whether he's open to higher taxes on the wealthy or whether the Liberals will make any concessions of their own before Tuesday's vote.

However, the withdrawal of the HST demand is "significant," he said.

"It was an expensive item -- one that we philosophically disagreed on -- and I know they felt strongly about it," Duncan said.

"I think it shows that they're willing to continue to work through at least till Tuesday. But there's still points of difference between us, significant points of difference. I don't want to downplay that."

The Liberals need at least two opposition members to support their budget -- or skip the vote -- next Tuesday to avoid sending voters to the polls just a few months after the Oct. 6 election.

The Opposition Conservatives have already said they'll oppose the budget, so McGuinty must woo the New Democrats for his government to survive.

The Liberals insist they've already incorporated key opposition demands in their March budget: the threat of a legislated public sector wage freeze to appease the Progressive Conservatives and a freeze on corporate tax rates for the NDP.

They took another step to garner NDP support for the budget Wednesday by announcing the merger of two large electricity agencies, even though it wasn't on Horwath's list of demands.

At times, the budget waltz between the NDP and Liberals appears to be more of a slam dance, with both parties hammering each other publicly to raise the stakes behind closed doors.

Earlier this week, McGuinty called on the NDP to take a stand on the wage freeze -- a sensitive issue for a union-backed party that's been urged by some of its supporters to vote against the budget if the Liberals don't withdraw the threat.

But with all three parties still mired in campaign debts, there's likely little appetite for another election.

Apart from surtax on the rich, Horwath wants to raise welfare rates, save daycare spaces and put more cash into community and home care. The party is also demanding a $250-million job creation tax credit, keep Ontario Northland in public hands, and help industries affected by the budget, including horse racing and tourism.

But the Liberals say her slate of proposals is far too expensive for a province that must slay its deficit in 2017.

Government house leader John Milloy, who is involved in the talks along with NDP house leader Gilles Bisson and both McGuinty's and Horwath's chiefs of staff, said the budget talks may continue into the weekend.

If a budget deal isn't reached by Tuesday, the NDP could buy more time by supporting the budget or abstaining from the confidence vote on the budget motion.

That would allow them to put off their final decision until a second confidence vote on the budget legislation is called.