JAKARTA, July 19 (Reuters) - Controversial Muslim cleric Abu Bakar Bashir launched a court case on Thursday demanding Indonesia's anti-terrorism police unit be disbanded because it harmed Islam.

The lawsuit charges that Detachment 88, a police unit funded and trained by the United States and Australia, targets innocent Muslim activists and does the bidding of Western powers hostile to Islam.

"Special Detachment 88 is harming Islam because they say Muslims are terrorists and they give Islam a bad name," said Bashir, jailed for 30 months for conspiracy over the 2002 Bali bombings but later cleared.

"The unit was formed not to fight terrorists but to fight Islam. That's exactly what infidels do," he told reporters after the session adjourned.

Bashir handed documents detailing the class action suit to a panel of judges at the South Jakarta district court, as white-clad supporters cheered from the gallery.

Regional and Western governments allege that Bashir was the spiritual leader of Jemaah Islamiah (JI), a militant group blamed for a string of deadly attacks in Indonesia.

Bashir has denied this.

Lawyers have said the lawsuit has been filed on behalf of Muslim activists alleged to have been wrongfully arrested.

The hearing will resume next week.

Hundreds of Muslim militants suspected of having links to JI have been arrested since the 2002 nightclub bombings in the resort island of Bali that killed 202 people, mostly foreigners.

In a recent crackdown, Detachment 88 arrested two alleged top JI leaders, including Abu Dujana, who confessed to heading the group's military wing.

Indonesia is the world's fourth most populous country, and about 85 percent of its people follow Islam. While the vast majority of Indonesia's Muslims are relatively moderate, a militant minority has become increasingly vocal.

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