Sanchez, who won the most seats in an election in April but fell short of an absolute majority, has faced three months of difficult coalition talks with Podemos, seen as natural allies of his centre-left Socialists.

While he was likely to fail to win Tuesday's first round vote, he could still be confirmed in a second round two days later, provided Podemos and the Socialists overcome their differences to strike a deal by that time.

"We haven't decided yet what we will vote but we obviously won't vote in favour (of Sanchez)," Podemos chief negotiator Pablo Echenique told Cadena Ser radio, when asked how his party would vote on Tuesday. He said the party had not yet decided whether to abstain or vote no.

Under Spain's system for choosing a prime minister, Sanchez would need an absolute majority of 176 yes votes in the 350-seat parliament to be confirmed on Tuesday. Different rules would apply in Thursday's second round, requiring more yes votes than no votes while excluding abstentions.

Echenique said that his party wanted to keep negotiating with the Socialists to try and eventually strike a deal on a coalition government.

Considering how difficult talks have been over the past three months, and tense exchanges between Sanchez and Iglesias in a parliament debate late on Monday, it remains to be seen how stable and united such a coalition government would be.

"In any case, a (Socialist) PSOE-Podemos coalition would make it difficult for the new government to implement big policy changes given it would restrict Sanchez's ability to reach agreements with other parties in parliament," said Antonio Barroso, of political consultancy Teneo.

Sources in Podemos and the Socialist party said that the main question was what role Podemos ministers would have.

Iglesias accused Sanchez in parliament on Monday of wanting to give them a purely "decorative" role without any real power.

If Sanchez is not confirmed as prime minister on Thursday, further votes could be held in September. If that failed too, a repeat election would be held on November 10.

"We expect a minority government eventually to be formed and believe markets should discount political risk, as fundamentals remain healthy and, paradoxically, Spanish political deadlock implies policy continuity," Barclays analysts said in a note.

Debate was ongoing in parliament on Tuesday morning ahead of the vote, expected later in the day.