SINGAPORE (Reuters) - Squabbling over voting clout soured the International Monetary Fund's annual meeting on Sunday as countries lined up to find fault with a plan crafted to reflect a shifting balance of power in the world economy.

The proposal, which IMF chief Rodrigo Rato says would usher in the most significant change at the fund in a generation, is almost sure to be approved when votes from the IMF's 184 member nations are tallied on Monday.

But the blueprint has exposed deep fault lines at an agency struggling to redefine its role in a world where fewer countries are turning to it for emergency loans and big countries are more frequently ignoring its policy advice.

The plan will immediately boost the IMF votes, or "quotas", of four countries -- China, South Korea, Mexico and Turkey -- to be followed by a second stage of broader reforms to recognise the growing weight of emerging nations.

Argentina and India, unhappy that they would not gain enough power, said the aim of the overhaul should be to give a louder voice to developing countries as a group.

"Unfortunately, the new quota formula that is foreshadowed in the proposed decision is pointing in the opposite direction," Argentine Economy Minister Felisa Miceli said.

"This is at odds with the objective of increasing the Fund's legitimacy," she told the International Monetary and Financial Committee, a panel of finance ministers that oversees the IMF.

The Netherlands expressed reservations about the complex plan on the opposite grounds that it would see its voting power diluted. The formula needed to be improved and could not be prejudged, Dutch Finance Minister Gerrit Zalm said.

The Group of Seven rich industrial nations, in endorsing the plan, promised on Saturday to work with other member governments to ensure the changes are implemented equitably.

The United States, the fund's largest and most influential member, acknowledged the discontent among some countries and said a one-off adjustment to share out voting power more evenly would have been preferable.

"We are sympathetic to the view that the best reform would be to do it in one step but its just not possible, and so you can not let the perfect be the enemy of the good," U.S. Treasury spokesman Tony Fratto said.

The risk for the IMF is that lingering unhappiness over the redistribution of "chairs and shares" could further erode its standing in the Third World, where critics already resent what they see as the fund's high-handed policy advice.

"We and several other important emerging markets and developing countries representing a substantial share of the global economy and population are opposed to the resolution," the Group of 24 developing countries said on Saturday.

The focus switched to the inner workings of the IMF a day after G7 finance ministers and central bank governors gave a positive outlook for the world economy but warned of the risks from inflation, high oil prices and protectionism.

The G7 -- the United States, Japan, Germany, Britain, France, Italy and Canada -- urged China to let its currency rise faster to help ease perilous imbalances in trade and backed a rise in the yen to reflect Japan's strengthening economic recovery.

Ministers returned on Sunday to the risks, with Indian Finance Minister Palaniappan Chidambaram warning that an abrupt correction in the U.S. housing market could affect the entire world economy.

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