* President is taking on cult-like cartel "La Familia"

* Soldiers patrol western state in a show of force

* La Familia is powerful in local politics

MORELIA, Mexico, July 22 (Reuters) - A cult-like drug cartel is defying President Felipe Calderon in his home state in western Mexico by taking on security forces with a menacing mix of violence, pseudo-religion and gifts for the poor.

"La Familia" (The Family) uses Bible scriptures to inspire its traffickers and has taken over smuggling in the state of Michoacan, gaining power despite Calderon's near three-year assault on cartels in the state and across the country.

After the group killed 16 police in a series of brazen attacks last week, Calderon sent some 5,500 troops, elite police and navy officers to the mountainous marijuana-producing state in one of the biggest surges of the drug war.

Helicopters whirred overhead on Wednesday and convoys of army trucks patrolled the colonial state capital of Morelia as tourists sat at cafes in the pink stone-colored city.

La Familia, whose leaders say they are proud natives of the state, has become one of Calderon's most formidable challenges as it goes beyond smuggling to seek political influence and social standing.

Led by evangelical Christian Nazario Moreno who calls himself "The Craziest One" and who has a $2 million bounty on his head in Mexico, the group preaches scripture mixed with self-help slogans to its members.

Handing out toys to children and money to build schools, the cartel tries to promote a mystique unique among Mexican gangs by claiming openly to protect the local population.

La Familia bans its members from drinking alcohol or taking narcotics, holds prayer and indoctrination sessions and finances rural evangelical churches and drug rehabilitation centers across Michoacan, the army says.

"I ask God for strength and he gives me challenges that make me strong," says one slogan signed "The Craziest One" and found by soldiers on a raid last year on a cartel safe house.

Formed in the 1980s, La Familia has vowed to stop sales of the party methamphetamine drug "Ice" in the state, saying it is destroying local communities. Instead, it exports all meth production to the United States

In a call to a local TV station last week, a cartel member said its main aim was to bring order to Michoacan, help the poor with cash handouts and protect working families.

"They want to see themselves as Robin Hood figures," said Julian Gudino, a security consultant in Mexico City. "Obviously this is false, but if they have that local support, they can run their trafficking business much more easily."

INTENSELY VIOLENT

As La Familia has grown to develop distribution networks in U.S. states such as Georgia, California and Illinois, it has also taken on the Gulf cartel's armed wing, the Zetas, a group from northeastern Mexico that has tried to take control of Michoacan.

In a full-page newspaper advertisement in 2006, La Familia said it was fighting back the "destructive power" of the Zetas and offering a cartel that "helps families."

Some residents in Morelia say La Familia may be the lesser of two evils. "If the army can't stop drug traffickers, I'd rather they had an interest in our communities even if it is only to benefit their business," said Ana Tinoco, an off-duty waitress sitting by Morelia's majestic cathedral.

But La Familia is by no means a soft touch.

A fight with the Zetas for Michoacan just five hours drive from Mexico City has killed almost 300 people this year, mirroring the growing violence across Mexico. The drugs war has claimed 12,800 lives since late 2006, worrying tourists and investors.

Intensely violent, the cartel dumped the blood-smeared bodies of 12 federal police in a heap by a remote highway last week in revenge for the capture of a gang leader by police.

U.S. anti-drug experts say members of La Familia must complete a three-to-six month training camp in Michoacan run by former Mexican and Guatemalan elite soldiers, and the group may may have linked up with Mexico's top drug lord Joaquin "Shorty" Guzman to share smuggling routes over the U.S. border.

"The criminals have a very clear objective and they're not afraid of the military," state police chief Minerva Bautista said.

La Familia also wields great power in local politics, making the organization harder to confront.

Troops earlier this year rounded up 10 mayors and a string of police chiefs accused of working for the cartel in one of the biggest single corruption sweeps of the drugs war.

The half-brother of state governor Leonel Godoy, himself a politician, is accused of providing protection for La Familia. Godoy denies any wrongdoing and says he will help any investigation involving his brother, who is on the run.