CORRECTED - Darling says FSA powers to be extended - paper

(Correcting spelling of Alistair in first paragraph)

LONDON, July 2 (Reuters) - British finance minister Alistair Darling said the Financial Services Authority would be allowed to extend its regulatory remit under new proposals to be published next week, according to the Independent newspaper.

This could draw hedge funds into the FSA's net, the paper said in an early copy of its Friday edition.

Darling told the paper in an interview that both the FSA and the Bank of England would be given more powers under the new government financial regulation proposals, confirming comments from Treasury Minister Paul Myners on Tuesday. [ID:nLU551925]

A turf war appears to have opened between the FSA and the central bank over who would get more powers under the new proposals, with BoE governor Mervyn King saying last week he had not been consulted on the reforms. [ID:nLO904160]

"It is not a turf war," Darling said in the interview. "It is a question of ensuring they both do the job they are set up to do and both do it effectively.

"They are not competing with each other. They are complementary," the paper quoted him as saying. (Reporting by Victoria Bryan, editing by Leslie Gevirtz)