* Report says Church put reputation before protection of children
* Seeks financial compensation for Ireland's Magdalene scandal
* Vatican says report is distorted, unfair and ideologically slanted (adds biggest clash in 20 years, challenge for papal commission, context)
By Stephanie Nebehay and Philip Pullella
GENEVA/VATICAN CITY, Feb 5 (Reuters) - The United Nations on Wednesday accused the Vatican of systematically turning a blind eye to decades of sexual abuse of children by priests, and demanded it immediately turn over known or suspected offenders to civil justice.
In a scathingly blunt report, the U.N. Committee on the Rights of the Child said Church officials had imposed a "code of silence" on clerics and moved abusers from parish to parish "in an attempt to cover up such crimes".
The Vatican called the report "distorted" and "unfair" and said the United Nations had ignored steps taken in the past decade to protect children.
The combative exchange sets the scene for the Vatican's biggest clash with the United Nations since 1994. Then, at a U.N. population conference in Cairo, the Vatican forced the international organisation to back down on a proposal to approve abortion as a means of birth control.
The report also lays out a fresh challenge for a commission named by Pope Francis in December to advise him on a scandal that has plagued the Church for decades.
The committee said it was "gravely concerned that the Holy See has not acknowledged the extent of the crimes committed, has not taken the necessary measures to address cases of child sexual abuse and to protect children, and has adopted policies and practices which have led to the continuation of the abuse by and the impunity of the perpetrators".
It urged the Vatican to "immediately remove all known and suspected child sexual abusers from assignment and refer the matter to the relevant law enforcement authorities for investigation and prosecution purposes".
The Vatican initially planned a muted response, according to a person familiar with the matter, but raised its tone, after much debate, in response to the report's demands that the Catholic Church scale back its opposition to abortion, artificial contraception and homosexuality.
"This committee has not rendered a good service to the United Nations," Archbishop Silvano Tomasi, head of the Vatican delegation to U.N. organisations in Geneva, told Vatican Radio, accusing the committee of interfering in religious freedom by trying to dictate the church's moral teachings.
Tomasi said non-governmental organisations favouring gay marriage - which the Church opposes - probably influenced the committee to reinforce what he called "an ideological line".
The committee said the Holy See must hand over an archive of evidence about the abuse of tens of thousands of children and take measures to prevent a repeat of cases such as the scandal of Ireland's Magdalene Laundries, where girls were forced to work in church-run institutions.
Pope Francis, in office for only 11 months, has called sexual abuse of children "the shame of the Church" and has vowed to continue procedures put in place by his predecessor, Benedict XVI.
But the report expressed "serious concern that in dealing with child victims of different forms of abuse, the Holy See has systematically placed preservation of the reputation of the Church and the alleged offender over the protection of child victims".
BISHOPS NOT ACCOUNTABLE
While several bishops have resigned after abuse scandals in their dioceses, victims' groups say the Vatican must make bishops legally accountable for alleged cover-ups.
"If the pope is serious about turning the page on this scandal, he should immediately dismiss any bishop who oversaw a diocese in which a priest who abused children was shielded from the civil authorities," said Jon O'Brien, president of the U.S. lobby group Catholics for Choice.
The report said Francis's commission should invite outside experts and victims to participate in an investigation of abusers "as well as the conduct of the Catholic hierarchy in dealing with them".
Miguel Hurtado, who was sexually abused by a priest in Spain when he was 16 and travelled to Geneva for the report's release, said he felt emotional and vindicated.
"Many times, victims were disbelieved. They doubted our stories, they doubted our motives. They thought that our motives were because we were after money or destroying or attacking the Church," the 31-year-old told Reuters.
At a stormy grilling by the committee in Geneva last month, the Holy See's delegation, answering questions from an international rights panel for the first time since the scandals broke about 15 years ago, denied allegations of a cover-up and said the Church had set clear guidelines to protect children from predator priests.
Wednesday's report called for an internal investigation of the Magdalene Laundries and similar institutions so that those who were responsible could be prosecuted, and "full compensation" could be paid to victims and families. (Editing by Kevin Liffey)