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By Marco Sibaja

BRASILIA (Reuters) - Brazil's local Roman Catholic church threatened on Tuesday to punish a priest for passing out condoms to prevent the spread of AIDS, highlighting an internal split among clergy in the world's biggest Catholic country over the controversial Vatican ban.

Warning of unspecified punishment, Archbishop Claudio Hummus condemned the priest's "incompatible" practice of passing out condoms to the poor in Brazil's biggest urban sprawl of Sao Paulo.

"Considering the clear and reiterated affirmation of the Pope and the Church, which condemns the use of condoms, I declare...that the priest's attitude is incompatible," Hummus said.

He added that his "letter of condemnation" published on Tuesday in local newspaper Folha de Sao Paulo could be followed by other punitive actions by the church "to correct this regrettable situation."

Italian priest Valeriano Paitoni, who has worked in Brazil for 22 years, drew the scorn of church officials by defending the use of condoms to prevent the spread of AIDS in a magazine interview published this week.

"If the condom protects life, there is no reason not to view it as a lesser evil...It deals with a greater good," Paitoni said.

The Vatican strictly opposes the use of condoms as a form of contraception and to their use as a way of combating the spread of AIDS, saying abstinence, fidelity and upholding family values are the only solution.

Brazil, considered Latin America's most sexually-liberated nation, is also know for its progressive, liberal Catholic clergy whose stance often differs from the Vatican's.

But Brazil's government officially blasted the local Roman Catholic church last month for its continued opposition to the use of condoms in this nation of 165 million -- where 80 percent of country is raised in the faith.

They pointed out that Brazil has one of the region's highest rates of AIDS, with at least 540,000 HIV-infected people, according to a study published last year.

Brazil reported in 1999 that most people failed to use condoms during sex and that young Brazilians were increasingly having sex before they turned 15.