* Rights groups say freedom of expression under threat
* Correa has been sparring with the media for years
QUITO Feb 7 Two Ecuadorean journalists have been sentenced to pay $1 million each in damages for libeling socialist President Rafael Correa, who faces mounting criticism he uses courts to muzzle media.
The pugnacious Correa has been sparring with local media ever since he took office in January 2007 promising a "citizens' revolution" in the South American OPEC member.
He often accuses the media of spreading lies to undermine his government and has called them "the real opposition," while news organizations say he is trying to censor critics.
A civil court judge's sentence against Juan Carlos Calderon and Christian Zurita stems from their publication of "Big Brother", a book alleging Correa was aware that his older brother, Fabricio Correa, was awarded public contracts.
In Ecuador, it is illegal for the president's close relatives to sign such deals.
"The sum is out of proportion, is absurd and irrational ... This is the way in which they are punishing the work of journalists," Calderon told local media on Tuesday, adding that the two authors would appeal the sentence.
Correa's lawyer Alembert Vera said that the sentence proved the journalists' real goal was to defame Correa.
"This sets a very good precedent, it's a victory for democracy, for respect, for dignity and honor," Vera was quoted as saying in the state-run news site El Ciudadano.
While Correa says media outlets are run by right-wing oligarchs intent on bringing him down, some foreign press watchdogs accuse him of behaving autocratically.
The New York-based Committee to Protect Journalists released a report in September saying media freedom in Ecuador is in danger because Correa is filing defamation lawsuits in civil and criminal courts, pre-empting private news broadcasts, enacting restrictive legal measures, and smearing critics.
"Big Brother," an investigative book released in 2010, says Correa's popularity suffered badly when local media reported that companies linked to his brother had oil and building contracts with the state worth nearly $170 million.
Correa denied he knew about the deals and he ordered the contracts be cancelled.
Ecuador's Supreme Court of Justice is expected to rule shortly on an appeal by El Universo daily over a sentence in which three newspaper directors and a former columnist were ordered to pay $40 million for libelling Correa.
The ruling Alianza Pais coalition is pushing two reforms in Congress that rights groups fear will be used to hamper freedom of speech.
One of them calls for the creation of a media watchdog that could be used to censor journalists and a second one seeks to restrict the kind of reports media can release about political candidates in the months leading to an election.
Government spending on roads, hospitals and schools have made Correa popular among the country's majority poor, but he faces criticism that he is trying to undermine Congress and shake up the judiciary to concentrate power in his own hands.
Correa has not yet said if he will run for re-election in a vote scheduled for January 2013. (Reporting By Quito Newsroom)