By Claudia Parsons

NEW YORK, June 20 (Reuters) - From Salman Rushdie to Monty Python, free speech even if offensive is worth protecting, Britain's interior minister said on Wednesday, defending a knighthood for Rushdie which has drawn protests from Muslims.

Angry protesters took to the streets in Pakistan and Malaysia on Wednesday to denounce Britain's award of a knighthood to Rushdie, whose novel "The Satanic Verses" outraged many Muslims worldwide and prompted death threats.

Britain's Queen Elizabeth announced the award for the Indian-born British writer last week for services to literature.

"We have a set of values that accords people honors when they contribute to literature even if we don't agree with their point of view," Home Secretary John Reid said, responding to a question at a lecture on counter-terrorism in New York.

"A lot of people were upset when John Cleese made 'Life of Brian,'" Reid said, referring to the movie by the British comedy troupe "Monty Python" which parodied the life of Jesus and offended many Christians.

Reid also noted that many Jews were upset by the work of Mel Gibson, whose 2004 film "The Passion of the Christ" drew charges of anti-Semitism.

"We have to be sensitive to the views of people of religion, people who have very strong views," he said.

"But I think that we all appreciate that in the long run our protection of the right to express your views in literature, argument, politics, is of over-riding political value to our societies," Reid said.

Pakistan and Iran on Tuesday summoned the top British envoys in their countries to protest the knighthood for Rushdie, who lived in hiding for nine years after Iran's late Ayatollah Ruhollah Khomeini issued a fatwa, or religious edict, in 1989 ordering Muslims to kill him.

"The Satanic Verses" prompted protests, some violent, by Muslims in many countries after it was published in 1988. Muslims say the novel blasphemed against the Prophet Mohammad and ridiculed the Koran and events in early Muslim history.

Reid, who is stepping down as minister at the end of this month when Prime Minister Tony Blair leaves his job, said he had not read "The Satanic Verses" but he recently read "The God Delusion" by Richard Dawkins, which puts the case for atheism.

"I'm sure many people who believe in God will find that a book that offends their sensitivities, but I don't think we should incarcerate Professor Dawkins because he's expressed a view with which we profoundly disagree," he said.

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