By Stephanie Nebehay

GENEVA, Jan 23 (Reuters) - United Nations Secretary-General Ban Ki-Moon said on Wednesday he was setting up an independent panel to review the safety and security of U.N. staff and offices worldwide after the deadly bombing in Algiers.

Ban, who earlier held talks with Algerian Foreign Minister Mourad Medelci in Geneva, was speaking at a memorial service for 17 U.N. employees who died in the twin blasts last month.

The bombs, one of which hit U.N. buildings, killed at least 41 people and were claimed by al Qaeda.

"In the light of recent events, and after consulting with the Algerian authorities and receiving their agreement, I am setting up an independent panel of experts to review the safety and security of U.N. personnel and premises," Ban said.

In 2003, 22 people, including the U.N. envoy Sergio Vieira de Mello, died in a bombing of the U.N. office in Baghdad. That attack prompted the U.N. to pull out its international staff from Iraq, leaving only local staffers to conduct minimal activities. In recent months that U.N. expatriate staff have progressively returned.

"Such a panel will address the strategic issues vital to United Nations staff security around the world," Ban said.

Later, he told a news conference that the panel, still being formed, would report to the U.N. General Assembly. Algeria's Interior Minister Noureddine Yazi Zerhouni has said such a probe was unlikely to prove a magic wand against terrorism.

U.N. Development Programme chief Kemal Dervis has said that Algeria failed to act on an earlier U.N. request to block off the street in the capital where its offices were located.

"It is these colleagues and the innocent Algerians who died with them, not the suicide bombers, who are the true martyrs of the Algiers bombings of 11 December 2007," Ban told former colleagues and sobbing families of the victims.

"We must take steps to improve our security worldwide. We will never be able to work completely free of threats to our safety, and we must never become a fortress, walled off from those we are there to support," he said.

But the world body must learn to balance its mission on behalf of the needy "with the need to protect our own," he said.

Photos of the 17 U.N. employees who lost their lives in Algiers -- and that of Algerian security guard Mouloud Bouldrouah who died trying to prevent the vehicle from entering U.N. gates -- were shown on the podium, surrounded by flowers.

Families of each victim lit a white candle in the memory of their loved one, including 14-year-old Oualid Lasli who lost his father, Mohamed Lasli, a driver for UNIDO. (Editing by Matthew Jones)

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