(Changes lede, adds details on protests)
* Vatican offers excommunicated Catholics return to the fold
* Mass confessions take place in central Madrid park
By Sonya Dowsett and Brenton Cordeiro
MADRID, Aug 17 (Reuters) - Thousands of protesters marched in Madrid on Wednesday against the cost of the Pope's visit to Spain this week at a time of growing public anxiety and economic hardship in the country.
Protesters of all ages walked in the old city centre under the slogan 'Nothing for the Pope from my taxes', as hundreds of thousands of young people gather in the capital of the mainly Catholic country to celebrate World Youth Day this weekend.
"It is costing a lot of money for the Spanish state which is going through a bad period," said 55-year old Rosa Vazquez, carrying a placard saying 'Religion is the opium of the people, don't drug yourself with our taxes'.
Pope Benedict will arrive in Madrid on Thursday for a four-day visit culminating in a mass on Sunday in the Cuatro Vientos aerodrome which over two million people are expected to attend.
The cost of the papal visit has triggered heavy criticism at a time of economic hardship in Spain from disaffected youths, as well as gay and lesbian and transgender groups, atheists and even some priests.
The crowds walked peacefully through the centre shouting chants against the visit and waving banners reading 'The Pope travels, the Pope pays'. Near Spain's central Sol square they were met with pro-Pope chants, with some waving Vatican flags.
Critics have put the cost of the visit at around 100 million euros but the government has declined to give a figure.
"We are not against the people celebrating the Pope's visit, but we don't agree that we have to pay without anyone asking us," said 20-year old Nora.
Others were more critical said the Church had too much power and held banners such as 'Papa don't Preach'.
Earlier on Wednesday the Vatican granted priests the right to forgive the sin of abortion when hearing the confessions of hundreds of thousands of young people attending a Roman Catholic youth festival in Spain this week.
The termination of pregnancy is a sin punishable by excommunication under Church law. The World Youth Day (WYD) pilgrims will attend a mass confession in the presence of Pope Benedict on Saturday in a central Madrid park.
"This (concession) is to make it easier for the faithful who attend the World Youth Day celebrations to obtain the fruits of divine grace," the Madrid archdiocese said in a statement on its website.
Two hundred white portable confessional cabins have been erected in Madrid's Retiro Park where hundreds of priests will take confessions in different languages from the pilgrims who have travelled to Spain from around the world.
The pontiff will sit in one of the booths on Saturday morning to hear confessions from three visitors, ahead of a mass with up to 6,000 seminarians.
The Vatican already announced on Aug. 11 that it had authorised a plenary, or full indulgence, to all the young people attending the celebrations.
An indulgence is a remission of the temporal punishment a person is due for sins that have been forgiven and is traditionally granted to WYD pilgrims.
Spanish Prime Minister Jose Luis Rodriguez Zapatero, an open secularist, has clashed with the church over abortion and has changed the law during his tenure to make it easier for women seeking to terminate unwanted pregnancies. (Additional reporting by Judy MacInnes and Tom Heneghan; writing Nigel Davies; Editing by Maria Golovnina)