* U.S, Qatar pile on pressure for Syria opposition to reach unity deal
* Assad comments hasten sense that opposition must be ready
By Rania El Gamal and Regan Doherty
DOHA, Nov 9 (Reuters) - Syria's fractious opposition, under pressure from the United States and Qatar to unite, looked likely on Friday to agree to form an inclusive new opposition body that would serve as a unity government if Bashar al-Assad falls.
Qatar, which has bankrolled the opposition to Assad and played a leading role in Arab diplomacy against him, is hosting an opposition meeting, with senior U.S. diplomats hovering on the sidelines, prodding the opposition to make a deal.
Rebel advances on the ground and increasing economic and social disintegration within Syria have added to the pressure on the opposition to form a body that can rule after Assad.
A source inside meetings that lasted into the early hours of Friday morning said members of the Syrian National Council (SNC), a group made up mainly of exiled politicians, had shifted views and were coming to accept the need to form a wider body.
"We will not leave today without an agreement," the source said. "The body will be the sole legitimate representative of the Syrian people. Once they get international recognition, there will be a fund for military support."
The new body would mirror the Transitional National Council that united the opposition to Muammar Gaddafi in Libya last year and then took power after he was ousted, the source suggested.
"They will create a 'temporary government', which could take control of embassies around the world and take Syria's seat at the U.N., because the regime would have lost its legitimacy."
An outline agreement could see the SNC and other opposition figures agree on a 60-member political assembly, or congress, as well as a military and a judicial council.
The SNC, which has previously been the main opposition group on the international stage, may have around a third of the seats in the new body but would otherwise lose much of its influence.
Though it was not yet clear whether the groups meeting in Doha will name members to the new body or broach the thorny issue of its leadership, its creation would mark an advance long sought by the United States and Qatar.
Foreign countries that oppose Assad are determined to push Syrian opposition figures to cooperate, which means bridging gaps between exiles and those working in Syria, and between liberals and increasingly powerful Islamist militants.
The West and its regional allies worry that were Assad to fall before the opposition unites behind a credible body capable of leading the country, increasingly powerful Islamist militia would quickly take Syria over.
Qatar's prime minister told delegates on Thursday to "get a move on" in a closed meeting in a Doha five-star hotel.
"The Qataris are not to going to let them leave here in failure after all this investment," said a diplomatic source on the sidelines of the Doha meetings.
U.S. Secretary of State Hillary Clinton last week called for overhauling the opposition amid eroding faith in the SNC, saying there needed to be representation of those "on the frontlines and dying". Britain's Prime Minister David Cameron also signalled international pressure to unite the opposition.
What began in March 2011 as a protest movement for reforms following uprisings in Egypt and Tunisia has spiralled into a civil war that has killed more than 32,000 people.
While the opposition argues, rebels have advanced, firing rockets at the presidential palace in Damascus this week.
Turkey said on Friday that 8,000 more refugees had fled across the frontier in the last 24 hours.
The International Committee of the Red Cross said on Thursday it could not keep pace with the needs of civilians.
Assad told Russia Today television on Thursday he would "live and die in Syria", comments that echoed the words of other Arab leaders before they lost power last year.
"Regional political developments as well as rapid military changes on the ground have caused a renewed sense of urgency within the SNC," said Michael Stephens, a Doha-based analyst with Britain's Royal United Services Institute think tank.
"A failure to reach an agreement would leave them woefully unprepared to take power should the unthinkable happen and Assad fall."
SNC members have previously resisted joining a wider body which might dilute their influence.
Calls for a new, wider body have been led by dissident businessman Riad Seif, prompting other SNC members to denounce him this week as a "U.S. agent". However, senior SNC member Burhan Ghalioun said the atmosphere at the talks was "positive".
"We all agree that we don't want to walk away from this meeting in failure," Ghalioun said on Thursday night, signalling the shift in the SNC's position towards agreeing to a deal.
Pressure on the opposition to unite increased further this week after the re-election of U.S president Barack Obama, which removed uncertainty about the U.S. position.
A diplomat familiar with the talks said that throughout the week the SNC had shifted towards taking international pressure more seriously, especially after Obama's victory.
"The Americans felt a swagger after the results of the election and Obama's win. No one can dismiss them anymore, because they are staying," he said, adding that a State Department official sat in on Thursday meetings.
"But reaching a real deal over the initiative will also depend on who joins this assembly from the SNC, which will have no real influence after that."
The SNC is due on Friday to complete elections to its executive council and choose a new leader, before continuing talks with Seif, representatives of rebel groups and other political factions on forming the new assembly.
The first diplomatic source sounded a note of caution.
"Yes there will be an agreement, but is it sustainable? Is it well thought through and well prepared? Will it fall through later on? The future will tell," he said.