By Nastassia Astrasheuskaya and Alissa de Carbonnel

MOSCOW (Reuters) - Family Christmas cards and smiling snapshots of children sent by their adoptive American parents fill Galina Sigayeva's office in Russia's second city St Petersburg.

Many of them were crippled by illness and in desperate need of medical care before her agency helped organise their adoption into U.S. families, she recalls.

Children's rights campaigners say children like these will suffer most if President Vladimir Putin approves a law barring American adoptions that has been rubber-stamped by Russian lawmakers. The act retaliates against a new U.S. law that will punish Russians accused of human rights violations.

Critics of the bill say Russian orphanages are woefully overcrowded and the fate of vulnerable children should not be used as a bargaining chip in a bilateral feud.

"These children are not even offered to foreigners until they get a certain number of (adoption) refusals from Russians," said Sigayeva, a neatly styled brunette who heads the New Hope Christian Services Adoption Agency.

"These are children with complicated diagnoses, really complicated. They are very ill children."

She smiled as she flipped through photos of children embraced by their adoptive parents, playing with family pets and enjoying presents and other trappings of holiday cheer.

"What surprises me is that here they all look so healthy, so fantastic, but you should see what they look like when they are taken from here," Sigayeva said.

"Some had to be carried to the border. We had a girl with hepatitis whom we helped from the emergency room."

Both sides in the heated debate surrounding the bill agree Russia's orphanage system is overwhelmed, riddled with corruption and most failing to place children in families.

More than 650,000 children are considered orphans in Russia - though some were rejected by their parents or taken from dysfunctional homes. Of that total, 110,000 lived in state institutions in 2011, according to the Ministry of Science and Education.

By contrast, in the United States - which has more than twice Russia's population - about 58,280 children were living in group homes and institutions last year, according to the U.S. Department of Health and Human Services.

Adoptions by Russian families remain modest, with some 7,400 adoptions in 2011 compared with 3,400 adoptions of Russian children by families abroad.

Russian politicians say it is an embarrassment that the country cannot care for its own, and supporters of the measure argue it will help stimulate reform and domestic adoptions.

"Foreign adoption is a result of the state and society's lack of attention to orphans ... It is, if you will, a result of our indifference," Prime Minister Dmitry Medvedev told officials at a ruling party congress last week.

American families adopt more Russian children - 956 last year - than those of any other country. Of the children adopted by Americans in 2011, 9 percent - or 89 - were disabled, according to official Russian figures.

Opponents of the legislation, who include senior officials such as Foreign Minister Sergei Lavrov, say politicking should not deprive orphans of this chance at better life.

"Russia is not able to provide for all its orphans," Boris Altshuler, director of the Moscow-based Rights of the Child advocacy group, said. "Although 1,000 is a small fraction - it was a help."

Deputy Prime Minister Olga Golodets has said the ban would violate international treaties on child rights, and the Kremlin's own human rights council called it unconstitutional.

"AMERICAN ROULETTE"

The ban responds to a U.S. law known as the Magnitsky Act, which punishes Russians suspected of being involved in the death in custody of anti-graft lawyer Sergei Magnitsky in 2009, and of other human rights violations, by barring them from entering the United States. Continued...