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By Louis Charbonneau

UNITED NATIONS, April 19 (Reuters) - U.N. Secretary-General Ban Ki-moon has recommended extending the mandate of a peacekeeping mission in the disputed territory of Western Sahara for a year, warning that the conflict there was in danger of reigniting, according to a new report.

"The risk of a rupture of the ceasefire and a resumption of hostilities, with its attendant danger of escalation into full-scale war, will grow significantly in the event that MINURSO is forced to depart or finds itself unable to execute the mandate that the Security Council has set," Ban said in the report, which was seen by Reuters on Tuesday.

Morocco expelled dozens of U.N. staff from the mission in Western Sahara, known as MINURSO, after Ban last month referred to the North African nation's 1975 annexation of the region from Spain as an "occupation."

Morocco has said its decisions were irreversible but that it was still committed to peace.

In his annual report to the U.N. Security Council, Ban urged the 15-nation body to ensure the resumption of full operations of MINURSO, which has been crippled by the staff reduction and closure of a military liaison office.

He said the resulting vacuum "can be expected to be exploited by terrorist and radical elements."

"I call on the Security Council to restore and support the mandated role of MINURSO, uphold peacekeeping standards and the impartiality of the United Nations, and, most importantly, avoid setting a precedent for United Nations peacekeeping operations around the world," he said.

The Security Council is scheduled to vote next week on whether to renew MINURSO's mandate.

The controversy over Ban's "occupation" comment, made during a visit to refugee camps for Sahrawi people, is the worst dispute between the U.N. and Morocco since 1991, when the international body brokered a ceasefire to end a war between Rabat and rebels fighting for independence in Western Sahara. MINURSO was established at that time.

The Sahrawis' Polisario Front separatist movement wants a referendum on independence, but Morocco says it will only grant autonomy.

The U.N. mission had nearly 500 military and civilian personnel before the recent staff reduction. Morocco also has canceled some $3 million in support for the mission.

"The military component will struggle to maintain its monitoring of the ceasefire given its reliance on civilian capabilities and technical functions for sustainability," Ban said.

"Other key tasks and standard peacekeeping functions, such as assessments of and reporting on local conditions that may affect the mission's operations and the political process, have been discontinued," he added. (Additional reporting by Michelle Nichols; Editing by Paul Simao)