UPDATE 1-Lula faces criticism in Brazil over Honduras role

(For full coverage of Honduras crisis, see [ID:nN22361272])

* Brazil gov't losing domestic support for Zelaya refuge

* Critics say Brazil fell for trap set by Hugo Chavez

* Minister says abandoning Zelaya now would be cowardice (Adds Amorim comments)

By Raymond Colitt

BRASILIA, Sept 29 (Reuters) - Brazil's government is facing growing criticism at home over its handling of the Honduran crisis as senior lawmakers accuse it of allowing the ousted president to use its embassy as a political platform.

Manuel Zelaya, who was toppled as Honduran president by a coup on June 28, has set up camp in the Brazilian embassy with dozens of supporters and has given numerous interviews to foreign and domestic media.

His surprise return from exile a week ago triggered violent protests in the capital Tegucigalpa and placed Brazil at the center of the Honduran power struggle and an international diplomatic crisis.

Government and opposition legislators in Brazil's Congress have urged President Luiz Inacio Lula da Silva to stop Zelaya from using the embassy as a political theater.

"Zelaya's political activities are unacceptable. They weaken Brazil's position and international image," Eduardo Azeredo, head of the Senate foreign relations committee, told Reuters.

Brazil should formally grant Zelaya political asylum and take him out of Honduras, Azeredo said. Brazil would still be seen as defending a democratically-elected leader without being directly involved in the dispute, he said.

Honduras' de facto government gave Brazil 10 days to decide what to do with Zelaya, but Lula rejected the ultimatum.

Former president and current Senate chief Jose Sarney, one of Lula's most influential allies, also criticized the government's position.

"There's a certain exaggeration in transforming the embassy into a campaign headquarters. This excess is not good for Brazil or Manuel Zelaya," said Sarney, adding that the embassy must abide by international rules on nonintervention in a country's domestic affairs.

Foreign Minister Celso Amorim defended Brazil's position before a Senate foreign relations committee on Tuesday.

"What's at stake here is not only a small country but the future of democracy in Central America," Amorim said. "Tolerating this coup could stimulate others in the region."