(Adds rebels fleeing with hostages)

BOGOTA, Jan 13 (Reuters) - Three children were killed and 12 other people were wounded in a mortar attack by Marxist rebels in a town in southwestern Colombia on Tuesday, police said.

A local police chief blamed the assault on the Revolutionary Armed Forces of Colombia, or FARC, saying rebels had fired home-made missiles at a police station in Roberto Payan, which lies in the Pacific coast province of Narino.

"They launched some mortars and civilians were affected. Three children were killed and 12 others were hurt," provincial police chief Col. William Montesuma told Reuters, adding that the gas-cylinder mortars had missed the police station and instead hit homes where residents were taking cover.

The children killed were ages 8, 11 and 12, Montesuma said.

Colombia's four-decades war has eased as President Alvaro Uribe has stepped up a U.S.-funded military campaign against the rebels, driving them further into mountains and jungles.

However, the Pacific coast area where Tuesday's attack took place is a major route for drug traffickers shipping cocaine to the United States and Mexico, and violence continues to plague the area.

Once a mighty peasant army that controlled swaths of Colombia in their fight for a socialist state, the FARC has been battered over the last year by the deaths of commanders, the rescue of a group of high-profile hostages and a rising number of desertions.

Two more FARC fighters fled the rebel force's ranks on Tuesday with hostages, Defense Minister Juan Manuel Santos said, in the third case of guerrillas being lured to surrender captives by a government reward program.

Colombia is encouraging rebels to desert by offering them cash rewards, and says it benefits from intelligence provided by demobilized fighters.

"The government is urging any guerrilla who has a hostage to escape with him, demobilize, hand over the hostage because they will find a state willing to give them legal and financial benefits," Santos told a news conference.

The two FARC deserters handed over a businessman and a 14-year-old boy who were kidnapped for ransom late last year. (Reporting by Luis Jaime Acosta; writing by Helen Popper; editing by Vicki Allen)

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