(Adds U.N. comment in paragraph 10)

By Francis Kwera

KAMPALA, Feb 20 (Reuters) - A peace deal that will let Ugandan rebel leader Joseph Kony avoid international war crimes charges drew a mixed reaction on Wednesday, with some calling it an affront and others lauding it as a practical solution.

The Ugandan government and Lord's Resistance Army (LRA) rebels on Monday signed an agreement on how to deal with war crimes committed during one of Africa's longest-running and brutal civil wars.

LRA leader Joseph Kony and two of his lieutenants have been charged with atrocities in the International Criminal Court (ICC) in the Hague, which under international law requires they be turned over immediately upon capture or surrender.

But the deal stipulates that the Ugandan government will set up special war crimes courts to handle the gravest crimes, while traditional justice known as mato oput will be used for others.

The LRA has vowed never to sign a final peace deal unless Kampala could persuade the ICC to drop the case - something analysts say is unlikely. The prospect of a trial in the Hague has kept Kony in hiding.

The Ugandan government has opted for what it argues is a more practical approach, a homegrown solution which has support by the Acholi people in the north who have borne the brunt of a war led by one of their own.

Norbert Mao, chairman of Gulu District -- which has been ravaged by the war -- hailed the agreement as a "major step towards peace."

"If the LRA has committed itself to the agreement, then the Uganda government must do everything possible, including lobbying to drop war crimes indictments ... to make sure sustainable peace returns," Mao told Reuters.

Nearly 2 million people have been forced into squalid camps, and tens of thousands killed in the 21-year conflict.

The agreement was also welcomed by U.N. Secretary-General Ban Ki-moon, U.N. spokeswoman Marie Okabe said in New York. But she added: "The challenge ahead will be to ensure the credible implementation of this agreement."

ICC SNUB

Some view the deal as a snub to the ICC and international practices.

"It is not acceptable for the Ugandan government and the LRA to make a deal that circumvents international law," Amnesty International legal adviser Christopher Keith Hall said. "Many of these people have been charged with horrific crimes ... they must be handed over to the ICC."

The LRA is notorious for brutal attacks against civilians, often burning them to death and hacking off their limbs, ears or lips. More than half of its fighters are believed to be children abducted from northern Uganda.

Human Rights Watch called the deal a possible "major step toward peace and justice for northern Uganda, but the true test lies in how the agreement is put into practice."

The significance of the deal is that it includes "a specific plan to try the most serious crimes," the watchdog's Richard Dicker said in a statement. But he cautioned that Uganda's courts may not be up to the task.

Others are skeptical of the LRA's commitment, especially because the rebels in the past two weeks have been accused of killings in neighboring southern Sudan and of leaving a disarmament assembly point in violation of an earlier deal.

"We have information that the first group of LRA has already reached the Central African Republic and we wonder who will be there to be disarmed when the time comes," said Col. Walter Ochora, commissioner of the northern Gulu district.

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