* Bill aims to retaliate against U.S. Magnitsky Act
* Putin hints he will sign the bill into law
* Legislation will also outlaw U.S.-funded political NGOs
* Measure likely to damage relations with Washington
By Alissa de Carbonnel
MOSCOW, Dec 21 (Reuters) - Russia's lower house of parliament approved a law banning Americans from adopting Russian children on Friday, in retaliation for U.S. human rights legislation which Vladimir Putin says is poisoning relations.
The State Duma overwhelmingly backed a bill which also outlaws U.S.-funded "non-profit organisations that engage in political activity", extending what critics say is a clampdown on Putin's opponents since he returned to the presidency in May.
The law responds to U.S. legislation known as the Magnitsky Act, passed by the U.S. Congress to impose visa bans and asset freezes on Russian officials accused of involvement in the death in custody of anti-corruption lawyer Sergei Magnitsky in 2009.
Washington's ambassador to Moscow, Michael McFaul, said the Russian bill unfairly "linked the fate of orphaned children to unrelated political issues".
Putin hinted at a news conference on Thursday that he would sign it into law once the Senate votes on it next week, describing it as an emotional but appropriate response to an unfriendly move by the United States.
"It is a myth that all children who land in American families are happy and surrounded by love," Olga Batalina, a deputy with Putin's ruling United Russia party, said in defence of the new measures.
In a pointed echo of the Magnitsky Act, the Russian legislation has become known as the Dima Yakovlev law, after a Russian-born toddler who died after his American adoptive father left him in locked in a sweltering car.
The law has outraged Russian liberals who say children are being made victims of politics. Some government officials, including Foreign Minister Sergei Lavrov, have expressed reservations about the legislation.
"Children should not be a bargaining chip in international affairs," said Mikhail Fedotov, the head of the Kremlin's human rights council.
Last year, 962 Russian children from orphanages were adopted by Americans while more than 45,000 have found homes in the United States since the 1991 Soviet collapse. Their parents are either dead or unable to care for them and some have complex medical needs.
The spat is overshadowing efforts to improve relations with U.S. President Barack Obama's administration.
Signalling Moscow is worried about long-term damage to trade and diplomatic ties, Lavrov has taken the rare step of appearing to stake out a view that differs from the Kremlin line. The Kremlin hopes Obama will visit Russia for a summit in 2013.
RHETORIC REMINISCENT OF COLD WAR
In a debate peppered with patriotic rhetoric reminiscent of the Cold War, deputies described foreign adoptions as an embarrassment, implying Russia could not care for its own.
The law was backed by 420 deputies and opposed by only seven in the 450-seat chamber. Its easy passage reflected a growing conservatism in society since Putin's return of the presidency.
The provision targeting non-governmental organisations, or NGOs, has also upset international human rights groups who accuse Putin of clamping down on civil society and dissent in his new six-year term as president following the biggest protests of his 13-year domination of Russian politics.
"There is a huge risk that the vaguely worded provisions in this bill will be used to clamp down on government critics and exposers of abuses," said John Dalhuisen, Europe and Central Asia Programme Director at Amnesty International.
It was fast-tracked and came to the third of three readings in the Duma's last session before the chamber, which is dominated by Putin's party, broke up for holidays.
It will go to a vote in the Senate next week but final approval rests with Putin.
Russia is the third most popular country for U.S. foreign adoptions after China and Ethiopia, according to the U.S. State Department, something regretted by Russian politicians.
"We are against our orphans wandering the globe," United Russia deputy Vladimir Vasilyev said.
"NOTHING TO DO WITH MAGNITSKY ACT"
Critics say the new move will deprive children stuck in orphanages the chance of growing up in the care of families.
"This has nothing to do with the Magnitsky Act," Fedotov said. "For us to transition to a refusal of international adoptions, we need for all children to be adopted in Russia... this is a long term goal."
Some prominent non-governmental organisations will be threatened with closure as the law bans U.S.-sponsored political NGOs from working in Russia. Russians who also hold U.S. passports will be unable to lead such groups.
Russian human rights activists said the latter provision specifically targeted veteran campaigner Lyudmila Alexeyeva, 85, a Soviet-era dissident who leads the Moscow Helsinki Group.
"Alexeyeva is the face of our human rights movement," human rights activists Lev Ponomaryov told Reuters. "The Duma members just showed what angry, evil creatures they are."
Activists say the main target of tougher rules is Golos, a group that receives foreign funding and compiled allegations of fraud in 2011 parliamentary elections and the March presidential vote.
But they fear that vague wording in the law means it will be applied to groups as wide ranging as veteran Russian rights group Memorial and the Moscow Helsinki Group.
Putin has accused the United States of stoking protest against his nearly 13-year rule and Russia ordered the U.S. Agency for International Development (USAID) to halt its work in the country in October.
Russian officials say they fear foreign powers will use non-profit groups to bring about the type of street protests that toppled governments in Georgia and Ukraine.