ABUJA, Feb 15 (Reuters) - The Nigerian government on Thursday cancelled an advert it had placed on U.S. television channel CNN because of a report broadcast last week about militants holding hostages in the oil-producing Niger Delta.

Information Minister Frank Nweke said Nigeria had demanded an apology from the station over the report, which he said depicted the situation in the Niger Delta in an "unethical and subversive" way.

"The government of Nigeria considers it improper to continue to run a promotional material about the country in a medium that has consistently, even unprofessionally, depicted it and her people in a denigrating manner," Nweke wrote to CNN.

The report showed masked gunmen and the 24 Filipino hostages they were holding in the remote creeks of the anarchic Niger Delta, where kidnappings of foreign workers are a common problem. The 24 captives have since been released.

In a long statement on Feb. 9 attacking the report, Nweke said it sensationalised the problems of the delta and misrepresented Nigeria as a country in perpetual crisis. CNN responded that it stood by its story.

In that earlier statement, Nweke said the Nigerian security agencies were investigating "subversive" activities by some foreign correspondents, without naming them. There are only about a dozen foreign journalists based in Nigeria.

Some Nigerian journalists have been arrested in past months over political stories, drawing international criticism, but there have been no recent examples of foreign journalists facing serious problems with the authorities.

Nigeria is due to hold elections in April that should mark the first democratic transition from one civilian government to another in Africa's most populous nation and top oil producer.

Britain expressed concern last month over the arrests of several Nigerian journalists and said the press should be allowed to cover the elections free from intimidation.

Nweke is the architect of a campaign called "Heart of Africa" that seeks to improve Nigeria's image. The advert that the government pulled from CNN was part of that campaign.

Nigeria has also bought advertising space on London buses and in underground train stations to display Heart of Africa billboards showing glamorous, successful Nigerians.

The campaign aims to debunk Nigeria's image abroad as a country blighted by corruption, crime, poverty and inter-communal violence. One of the slogans is "Nigeria. It's not what you think."

But such efforts have had to contend with a constant flow of bad news, especially from the Niger Delta, the impoverished wetlands region that accounts for all of Nigeria's oil output.

Kidnappings are an almost daily occurrence there, thousands of expatriate workers have fled and a fifth of oil production is shut down because of militant attacks.

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