By David Milliken and Peter Griffiths

LONDON (Reuters) - British finance minister George Osborne said on Wednesday he would break a key debt promise and warned that growth will be weaker than expected in a bleak outlook that could damage his party's hopes of winning a 2015 election.

In a budget update to parliament, Osborne said weak growth meant he will be a year late in meeting a self-imposed target of seeing debt falling as a percentage of Britain's national output by 2015/16.

Osborne said Britain must stick with its austerity program, despite economic headwinds from the euro zone debt crisis and weak global growth.

"Britain is on the right track. Turning back now would be disaster," Osborne told parliament to jeers and roars of disapproval from opposition politicians. "It is a hard road, but we are getting there."

The economy was now forecast to grow by only 1.2 percent in 2013, well down from the 2 percent predicted in March, Osborne said, citing figures from the independent Office for Budget Responsibility.

The government's fiscal watchdog expected the economy to shrink by 0.1 percent in 2012, compared to a prediction of 0.8 growth in March, and grow by 2 percent in 2014, compared to the 2.7 percent previously forecast.

The sluggish economy has wrecked the Conservative-Liberal Democrat coalition's original plan to wipe out a large structural budget deficit before the next parliamentary election due in 2015.

The opposition Labour Party accuses Osborne of stubbornly sticking to a failed austerity plan has choked off growth, sapped demand and eroded much-needed tax revenues.

Cameron is trailing Labour by around 10 points in the polls after a bruising year marked by weak growth, criticism of his austerity measures and an unpopular budget in March that led to a series of policy U-turns.

The government made dealing with Britain's budget deficit -- which hit a record above 11 percent of GDP before the 2010 election - its biggest priority when it came to power.

Inheriting Britain's biggest budget deficit since World War Two, Osborne said he had to cut borrowing sharply to ensure bond investors would continue to lend to the government and to achieve a lasting recovery.

He told parliament that Britain's budget deficit would fall every year until the next election, adding: "Yes the deficit is still far too high for comfort. We cannot relax our efforts."

As a result, the austerity drive will be drawn out with spending cuts extended by a further year into 2017/18.

Osborne has staked his reputation on cutting public spending, borrowing less and restoring growth. Britain could be in danger of losing its prized triple-A credit rating before long.

The chances of Osborne masterminding a strong recovery in time for voters to feel the benefits before a 2015 election appear to be shrinking. Only one in five voters trust him to fix the economy, according to a Comres/ITV News poll.

(Additional reporting by Matt Falloon, editing by Guy Faulconbridge and Mike Peacock)