By Mohammad Ponir Hossain, Ruma Paul and Sam Jahan

DHAKA (Reuters) -Bangladesh is expected on Tuesday to formally accept a court ruling to cut most government job quotas, meeting a key demand of students whose protests have sparked one of the deadliest outbreaks of violence in years.

There was no fresh trouble for a second straight day in Dhaka and most major cities but the army chief said security had still not been entirely restored after he surveyed the capital city by helicopter.

The government shut mobile internet services, imposed a curfew and deployed the army from Saturday at midnight to contain clashes between protesters and security forces that spread across the country of 170 million over the past week.

Almost 150 people have been killed in the protests with more than 1,600 arrested in the South Asian nation's two main cities of Dhaka and Chittagong since the violence erupted.

The protests abated after the Supreme Court ruled on Sunday in favour of an appeal from the government and directed that 93% of jobs should be open to candidates on merit.

Prime Minister Sheikh Hasina's government scrapped the quotas in 2018 that had blocked 56% of state jobs at the time, but a high court ruling restored them last month, kindling the student protests.

Students were furious because quotas left less than half of state jobs open to merit amid an unemployment crisis, particularly in the private sector, making government sector jobs with their regular wage hikes and perks especially prized.

The unrest has posed a new headache for Hasina, who won a fourth straight term in power in January in an election boycotted by the main opposition.

Her government has sought to fix the struggling economy after securing a $4.7 billion International Monetary Fund bailout last year.

STUDENT DEMANDS

Protesters on Sunday gave the government 48 hours to meet eight new demands, such as a public apology from Hasina and the reopening of university campuses shut when the violence began, but did not say what would happen if the deadline wasn't met.

Hasina told business leaders in Dhaka on Monday that her political opponents were responsible for the violence, and that the curfew would be lifted "whenever the situation gets better".

The main opposition Bangladesh Nationalist Party (BNP) denied involvement in the violence.

BNP Secretary General Mirza Fakhrul Islam Alamgir told Reuters many party leaders had been arrested over the last few days, which the police did not immediately confirm. "The main problem now is that there is no democracy in this country."

Critics have previously accused Hasina of authoritarianism, human rights violations and crackdowns on free speech and dissent - allegations her government denies.

Zunaid Ahmed Palak, a junior technology minister, told reporters that repairs were being carried out to restore telecoms services after some communications infrastructure was vandalised during the violence.

Officials said the curfew would be relaxed for four hours on Tuesday afternoon, up from three on Monday, to allow people to buy essentials.

Some people who ventured out in Dhaka on Tuesday said prices of food and other essentials had soared. Mohammad Sabuj, a rickshaw puller, said vegetable prices were up by over 50%. "We'll have to starve if this continues."

High inflation triggered protests ahead of January's national election.

(Writing by Sakshi Dayal and Shivam Patel; Editing by YP Rajesh and Mark Heinrich)