(Add Vatican dismisses letter as paid propaganda, paragraph 12)
By Philip Pullella
ROME, July 25 (Reuters) - More than 50 dissident Catholic groups published an unusually frank open letter to Pope Benedict on Friday saying the Church's ban on contraception had been "catastrophic" and urging him to lift it.
The letter was published as a paid half-page advertisement in Corriere della Sera, Italy's largest newspaper, on the 40th anniversary of the late Pope Paul VI's controversial encyclical "Humanae Vitae," which enshrined the ban.
While criticism of the Vatican and its views is fairly common in articles and editorials in Italian newspapers, it is unusual for a group to take out paid advertising against the pope, particularly in a large-circulation mainstream newspaper.
The letter said the Church's anti-contraception policy "has had a catastrophic impact on the poor and powerless around the world, endangering women's lives and leaving millions at risk of HIV."
It also said the encyclical continued to be "a source of great conflict and division in the Church" and because most Catholics use contraception and feel they are not sinning, the policy has been "an utter failure."
Pope Paul's encyclical, written in 1968 at the height of the sexual revolution, has been defended by his successors John Paul and Benedict. Benedict recently defended it as far-sighted and said it was "all too often misunderstood and misinterpreted."
The letter was signed by groups such as Catholics for Choice, which is U.S. based, We Are Church, which has branches in numerous countries, and New Ways Ministry, which helps minister to gay Catholics.
Vatican spokesman Rev. Federico Lombardi told Vatican Radio that many of the groups which signed the letter were "very insignificant" and dismissed it as "paid propaganda in favour of the use of contraceptives."
"One wonders who paid for it and why," Lombardi said.
The letter said: "It is clear to us that the Catholic church cannot move forward until it honestly confronts the paradox of Humanae Vitae".
"Most Catholics use modern contraceptives, believe it is a moral choice to do so and consider themselves Catholics in good standing, yet the Catholic hierarchy completely denies this reality, forcing the clergy into silence on this and most other issues related to sexuality," it said.
The letter concluded:
"Pope Benedict, we call on you to use to use this anniversary as an opportunity to start the process of healing by being true to the positive aspects of Catholic teachings on sexuality and lifting the ban on contraception to allow Catholics to plan their families safely and in good conscience."
(Writing by Philip Pullella; editing by Robert Hart)