By Boldizsar Gyori

DEBRECEN, Hungary (Reuters) - Thousands of Hungarians protested against nationalist Prime Minister Viktor Orban at a rally on Sunday weeks ahead of European Parliament and local elections due in early June.

Peter Magyar, a former government insider seen by some observers as the first serious threat in years to Orban, staged the rally attended by around 10,000 people in the eastern town of Debrecen, a stronghold of the ruling Fidesz party.

Fidesz candidates have carried the town since the late 1990s with the ruling party winning about 60% of the vote at the last election compared with around a third for opposition parties.

Addressing flag-waving supporters, Magyar took aim at one of Orban's core policies, criticising what he called the extremely low level of child support allowances in Hungary.

"If you tell this story anywhere in Europe, no one is going to believe you," Magyar said.

Orban says that among EU countries Hungary is spending the largest share of its economy on supporting families.

"We need an entirely new system where social support is indeed targeted based on social needs," Magyar said.

He said Hungary was ruled by what he called a well-connected elite, which he would seek to end if elected.

International watchdogs say Orban has channelled European Union funds to businessmen close to Fidesz to entrench himself in power. Orban says Hungary is no more corrupt than other countries.

The watchdog tasked with overseeing EU funds says it lacks the proper authority to expose possible wrongdoing and has called for additional powers.