UPDATE 1-Airline in-flight security rules eased-source

CHICAGO Dec 28 (Reuters) - The U.S. Transportation Security Administration (TSA) has eased airline security rules that were put in place in the wake a foiled Christmas day terror plot, a source with knowledge of the rules said.

The TSA will now let pilots decide whether to allow passengers to keep items in their laps or require them to remain seated during portions of the flight, said the source who spoke on condition of anonymity.

The TSA also will let pilots and airlines determine whether in-flight entertainment systems that show a plane's location should be turned off to avoid a security risk, the source said.

A TSA spokeswoman did not immediately return calls seeking comment.

(Reporting by Kyle Peterson, editing by Leslie Gevirtz)