JERUSALEM, April 15 (Reuters) - The Vatican said its envoy to Israel would attend a state Holocaust memorial on Sunday after threatening to stay away in protest at a display implying the wartime Pope Pius XII was indifferent to the deaths of Jews.

Archbishop Antonio Franco had asked the Yad Vashem Holocaust Museum in Jerusalem, which hosts the ceremony, to remove the controversial photo caption. The museum's chairman Avner Shalev told the envoy in a letter he would be open to reviewing the matter.

"The ambassador is therefore happily responding to the invitation, ensuring the presence of the Holy See to such a significant event," Vatican spokesman Federico Lombardi said in Rome.

The caption says that, during World War Two, Pius "abstained from signing the Allied declaration condemning the extermination of the Jews" and "maintained his neutral position throughout the war".

Defenders of the wartime pontiff have said he did everything possible to help Jews, while critics have portrayed him as an anti-Semite whose views were formed while working in Germany before his election as Pope in 1939.

"Yad Vashem believes that it was inappropriate to link an issue of historical research with commemoration of the victims of the Holocaust," the museum said in a statement.

Avner said Yad Vashem "would be pleased to examine any new documentation that may come to light on the issue".

Yad Vashem, which contains the largest archive of data on the Holocaust in which 6 million Jews were killed, has called on the Vatican to open its archives relating to Pope Pius XII "to possibly learn new and different information" about him.

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