(Adds quotes from Sanchez, details on content, staff and Internet access)
HAVANA May 15 (Reuters) - Cuba's prize-winning dissident blogger Yoani Sanchez is launching the island's first independent digital newspaper next week to challenge the communist-ruled country's state-controlled media.
Sanchez said the online publication will be named "14ymedio," in honor of the year of its launch and the 14th floor Havana apartment where she writes her popular Generation Y blog on daily life and politics in Cuba.
Going up against Cuba's heavy media restrictions will be difficult for her team of 11 journalists, she admitted on her blog on Wednesday.
"In recent weeks we have seen a preview of how official propaganda will demonize us for creating this medium," Sanchez wrote, adding that several of her online team have received warning calls from Cuban state security officials ahead of the official launch on May 21.
Public criticism of Cuba's communist system can be considered enemy propaganda, punishable by stiff jail sentences.
Most Cubans will not be able to read the new publication. Only 2.6 million out of a population of 11.2 million have access to the Internet. And most of those who do have only been able to explore a limited, state-controlled basket of approved websites.
Sanchez, 38, has won several prestigious media awards in the United States and Europe and has been included on Time magazine's annual list of 100 most influential people.
Vowing to be independent and transparent, Sanchez said she opted for online journalism to voice her criticism of Cuba's one-party system, rather than becoming an opposition politician.
She hopes 14ymedio "will support and accompany the necessary transition that is going to take place in our country."
The editorial team will be led by Sanchez's husband, Reinaldo Escobar, and the new website will take over hosting the Generation Y blog which will continue its seven-year run.
Besides herself and Escobar, the staff includes two professional journalists, a dentist, a civil engineer and a hairdresser, Sanchez told Reuters in an interview.
She prefers to call "14ymedio" a digital medium, rather than newspaper, seeing newspapers as a medium of the past. It will cover a broad range of topics from politics to lifestyle and culture, as well as interviews.
STAFF REGISTERED AS 'TYPISTS'
Under Cuba's laws for private sector employment, the reporters will operate under state licenses for "typists," which Sanchez said was "the closest thing to journalism" that exists under current regulations.
The staff will be unpaid. "This is not earning a living; it's a passion," she said.
Cuba's state-run International Press Center, which handles the foreign media, declined to comment on the legality of 14ymedio's launch.
Six of the nine reporters have been called in for questioning by state security officials, Sanchez said. "They were pressured and told I was a bad, bad person," she said.
The publication has no office in Havana nor email connection, so reporters will rely on mobile phone text messaging. Stories will be uploaded to the website server by public wifi access at local hotels.
Launched with $150,000 in initial funding, the website was designed in Europe. The funding came from small donors, she said.
"We don't accept any government money, only from individuals connected to journalism," she said, adding she hoped to move to a subscription platform in the future. (Reporting by David Adams; Editing by Cynthia Osterman)