RIYADH, Dec 1 (Reuters) - Saudi clerics are not doing enough to discourage militancy among Saudi youth, including those who want to fight in Iraq, Interior Minister Prince Nayef said in comments published on Saturday.

It was the second criticism of clerics by the powerful member of the royal family this year. In June he said in a speech to hundreds of clerics that they needed to stop Saudis carrying out suicide attacks in Iraq.

Asked if he felt there had been "progress" since that meeting, the minister told Okaz newspaper in an interview: "No, not at the level I would hope for."

Hundreds of Saudis are thought to be among foreigners fighting with al Qaeda in Iraq against U.S. forces and the U.S.-backed government, and there have been reports in Saudi Arabia about sons of prominent Saudi clerics trying to join the al Qaeda insurgents in Iraq.

Saudi authorities are worried that Saudis could return to continue their fight in the kingdom. Commentators have said reports of Saudis in Iraq have embarrassed the country.

In 2003, Saudi militants allied to al Qaeda launched a campaign of suicide bombings and attacks on government installations, energy facilities and foreigners, in an effort to topple the U.S.-allied royal family.

The Saudi royal family, while allied with the clerics in promoting an austere form of Sunni Islam, has been embarrassed by the way some clerics helped create al Qaeda which then turned against the country's rulers.

The Interior Ministry said last week it had arrested 208 people who had formed cells aiming to attack an oil site, kill clerics and security figures, and set up a media wing that was helping Saudis go to Iraq.

Militants consider many clerics as government stooges.

"There are those who have done their job and those who have still to step up, and that includes religious scholars, intellectuals and the media," the minister told Okaz.

"But as for preachers, there has to be an ideological effort that is strong enough to refute the falsehoods and tell people the truth about Islam."

Around 264 people have died in the violence, which has tailed off since a failed attempt in February 2006 to storm a major oil facility in Abqaiq. (Reporting by Andrew Hammond, editing by Tim Pearce)

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