UPDATE 1-Australian government considers help for struggling Qantas

* Airline due to report first-half loss this week

* Airline declines to comment on reports of job cuts, asset sales

(Updates with government comments on support, possible changes to ownership)

SYDNEY, Feb 25 (Reuters) - The Australian government said on Tuesday it is looking at ways to assist Qantas Airways Ltd

QAN.AX after the carrier declined to comment on reports it is preparing to axe up to 5,000 jobs and sell some assets.

Qantas has warned that it will post a first-half loss of up to A$300 million ($270.53 million) when it reports its earnings on Thursday.

The airline said it will be making "some tough decisions" in order to achieve its goals of A$2 billion cost savings over the next three years and convince both the government and investors it has a turnaround strategy in place.

However, it declined to comment on local media reports that between 3,000 and 5,000 jobs could go and that it plans to sell its terminal at Melbourne Airport.

Qantas has been lobbying the federal government for financial assistance, claiming arch rival Virgin Australia's

VAH.AX access to foreign funding via its major shareholders Gulf carrier Etihad, Singapore Airlines SIAL.SI and Air New Zealand, has created an unfair playing field.

Qantas is seeking a government debt guarantee to give it access to cheaper capital.

Prime Minister Tony Abbott said it was in Australia's interests for Qantas to "survive and to flourish" as a major employer for the country.

"This government will do what it can to give it a level playing field," Abbott said in parliament, adding that the airline needed "to put its own house in order."

Transport Minister Warren Truss said the government is drafting changes to the Qantas Sales Act to lift the current 49 percent foreign ownership limit as well as alter restrictions on smaller shareholdings for foreign airlines.

The opposition Labor and Greens parties have vowed to block any such move in the upper house, which would stop it becoming law.

($1 = 1.1090 Australian dollars)

(Reporting by Jane Wardell; Editing by Andrew Roche and Matt Driskill)

((jane.wardell@thomsonreuters.com)(+61 2 9373 1817)(Reuters Messaging: jane.wardell.thomsonreuters.com@reuters.net))

Keywords: AUSTRALIA QANTAS/