By David Beasley

ATLANTA (Reuters) - A Georgia city settled a federal lawsuit on Thursday filed by a Muslim woman who was arrested and jailed after she refused to remove her headscarf before entering a courtroom.

Lisa Valentine was accompanying a nephew to court in Douglasville in December 2008 when an officer manning a courthouse metal detector told her that headscarves could not be worn in court, according to the suit filed last year.

Valentine then told the officer the policy was discriminatory and tried to leave, but she was arrested and cited for contempt, the lawsuit said.

Valentine was later forced to remove her headscarf, handcuffed and sent to jail for several hours, though the contempt charge was later dropped.

The wearing of Muslim headscarves, which typically cover a woman's hair and neck as a sign of modesty, in public buildings has sometimes sparked controversy in the United States and in Europe.

In France, authorities banned the scarves in schools on the grounds that they violated the country's principle of secularism. U.S. civil rights advocates argue that such a ban in the United States would violate religious freedoms.

As part of the settlement, the city of Douglasville has adopted a new policy permitting headscarves in the courtroom and allowing those wearing religious head coverings to go through security screening in a private area by an officer of the same gender.

"The idea that everyone is equal before the law is a hallmark of American justice, so nobody should be treated unfairly when she enters a courthouse," said Ariela Migdal, senior staff attorney with the American Civil Liberties Union's Women's Rights Project.

"These simple provisions will ensure that Muslim women receive the same respect and access to civic participation as anyone else."

Douglasville City Manager Bill Osborne declined to comment on the settlement on Thursday.

Valentine's suit argued that by prohibiting her from wearing a headscarf in court, the city violated her constitutional right to free expression of religion and subjected her to "severe discomfort, humiliation and emotional distress."

"I am glad that Douglasville has agreed to formal policies to make sure this never happens to anyone else," Valentine said in a statement. "Acknowledging that I was improperly treated was the least that my city could do."

(Editing by Colleen Jenkins and Cynthia Johnston)