UPDATE 1-Canada sees isotope reactor off line till late '09

*Reactor has been out of operation since May

*Decision on repair method will be made in next few weeks (Adds details)

TORONTO, July 8 (Reuters) - Atomic Energy of Canada Ltd said on Wednesday it expects its troubled Chalk River nuclear reactor, which produces a third of the world's medical isotope supply, to be off line until late 2009.

The aging reactor has been out of operation since May 17 because of a heavy water leak. Government-owned AECL had originally estimated it would be back in action after three months.

AECL officials said during a conference call on Wednesday that the best repair method would be determined in the next few weeks. It would then be able to provide a more definitive timetable for start-up.

It said it expects the repair and restart phases to take at least four months.

Chalk River in eastern Ontario produces most of the isotopes distributed by MDS Nordion, a subsidiary of Canadian health sciences company MDS Inc (MDS.TO).

The isotopes, which are used in medical tests and cancer treatments, are now in increasingly short supply. (Reporting by Scott Anderson; editing by Peter Galloway)