CORRECTION: Brown demands Moscow reverse British Council ban

(Corrects first name of Litvinenko in paragraph 2)

By Sophie Walker

LONDON (Reuters) - Russia's plan to close regional offices of the British government's cultural arm is totally unacceptable, Prime Minister Gordon Brown said on Thursday, demanding Moscow reverse its decision.

Relations between the two countries are at their worst since the Cold War, soured by mutual espionage allegations, the murder of former Russian intelligence official Alexander Litvinenko in London last year, tit-for-tat expulsions of diplomats and a revival of Russian long-range bomber patrols.

Russia's Foreign Ministry said on Wednesday it would temporarily ban the British Council in all regions of the country except Moscow from January 1, saying three regional cultural offices had not been legally registered.

"This is totally unacceptable ... We wish this action to be desisted from immediately," Brown told a parliamentary committee, adding that Russia must not put at risk the welfare of British Council staff.

Foreign Secretary David Miliband said the British Council's presence in Russia was entirely in line with international law.

"For Russia to carry out its threat would therefore constitute a serious attack against the legitimate cultural agent of the British government; would show a disregard for the rule of law and would only damage Russia's reputation around the world," he said in the statement.

Miliband said Britain was discussing the implications of Russia's threat with partners in the European Union and the Group of Seven rich countries and was grateful to the EU for expressing its concern to Russia about the situation.

The British Council operates as a not-for-profit charity run as a royal charter by the British government in 109 countries, teaching English, providing business contacts and administering academic tests for students who wish to study in Britain.

The murder suspect at the centre of the bitter diplomatic row said the organization was a cover for espionage.

Britain wants Moscow to extradite former KGB bodyguard Andrei Lugovoy to stand trial for poisoning Litvinenko with radioactive polonium. Moscow has refused the extradition request. Lugovoy denies murder.

"It's no secret that special services were actively working in the British Council," he said in Moscow at a congress of the nationalist LDPR party, which he is due to represent in parliament after winning a seat in a Dec 2 election.

He offered no evidence for the allegation. The British Council rejected the charge, saying it was purely a cultural relations organization. "We do not work in politics or with any intelligence agencies," it said in a statement.

Both Brown and Miliband said Moscow's action would hurt many Russians who benefit from the British Council's work.

(Editing by Philippa Fletcher)