UPDATE 3-Iran to shut down Google email service-WSJ

* Google sees sharp drop in Gmail traffic in Iran

* U.S. government unable to confirm report

* Iran to start national email service-WSJ (Updates with Google comments)

SAN FRANCISCO, Feb 10 (Reuters) - The Iranian government plans to permanently suspend Google Inc's (GOOG.O) email service in the country, the Wall Street Journal reported on its website on Wednesday.

Google said it experienced a sharp drop in email traffic in Iran, and that some users in the country were having trouble accessing Gmail, but said its networks were working properly.

The report comes as Iran braces for new opposition protests on Thursday during rallies marking the 1979 Islamic revolution. Protesters made use of modern networking tools such as Twitter and Gmail instant messaging last June after a disputed election plunged Iran into crisis.

Google is already at loggerheads with China's government after it threatened to withdraw from the country last month over claims of online attacks and issues over censorship.

Iran's telecommunications agency announced the suspension and said a national email service for Iranian citizens would soon be rolled out, the Wall Street Journal reported.

Google reported a drop in email traffic, but did not confirm the Journal report.

"We have heard from users in Iran that they are having trouble accessing Gmail," a Google spokesman wrote in an e-mail to Reuters. "We can confirm a sharp drop in traffic, and we have looked at our own networks and found that they are working properly."

He added that Google supported free online communication, but "sometimes it is not within our control."

There was no immediate comment from Tehran, where it was after midnight when the news broke. Opposition leaders have called on supporters to take to the streets on Thursday, raising the risk of renewed violence. [ID:nDAH033066]

The U.S. State Department could not confirm the report, but said any efforts to keep information from Iranians would fail.

"While information technologies are enabling people around the world to communicate ... like never before, the Iranian government seems determined to deny its citizens access to information, the ability to express themselves freely, network and share ideas," State Department spokesman P.J. Crowley said.

"Virtual walls won't work in the 21st century any better than physical walls worked in the 20th century." (Reporting by Gabriel Madway, Bill Rigby and Arshad Mohammed, editing by Gary Hill and Anthony Boadle)