By Jeremy Pelofsky

WASHINGTON (Reuters) - The Obama administration accused a firebrand Arizona sheriff on Thursday of engaging in racial profiling of Latinos and making unlawful arrests in a crack down on illegal immigrants.

The Maricopa County Sheriff's Office -- led by Joe Arpaio, a sheriff famous for making inmates wear pink underwear -- regularly violated U.S. civil rights laws and the Constitution, the U.S. Justice Department said in a scathing report.

The Obama administration successfully blocked Arizona's anti-immigration law, passed in 2010, which empowered police officers to check the immigration status of those they stop. The U.S. Supreme Court agreed this week to hear the state's appeal.

The Justice report released on Thursday also revealed evidence that deputies used excessive force, failed to protect the Hispanic community adequately and tried to harass or intimidate activists who protested their tactics.

The Justice Department said Arpaio's deputies regularly targeted dark-skinned people for traffic stops or for speaking Spanish at a local business. Additionally, they conducted raids aimed at sweeping up illegal immigrants.

"We found discriminatory policing that was deeply rooted in the culture of the department," Thomas Perez, head of the civil rights division at Justice, told reporters. He cited a "penchant for retaliation for people who speak out against them."

Among the reforms sought, U.S. officials want the sheriff to institute new training, to develop a complaint and disciplinary system, and to engage in outreach to the Latino community.

Perez said a criminal investigation into the sheriff's office was ongoing and declined to elaborate.

The Justice Department report also went directly after Arpaio, saying his "own actions have helped nurture MCSO's culture of bias."

Arpaio has denied charges by Hispanic and civil rights activists that his department engages in racial profiling. The state has been particularly affected by an influx at the border of illegal immigrants from Mexico and beyond.

The sheriff's Deputy Chief Jack MacIntyre said the Justice Department announcement smacked of politics with Perez holding a news conference in Arizona shortly after meeting attorneys. Arpaio is due to hold a news conference later on Thursday.

JAN. 4 DEADLINE

The Justice Department gave Maricopa County a January 4 deadline to agree to negotiations to address the problems and warned that if it balked, the government would go to court to try to compel compliance.

Perez said a criminal investigation into the sheriff's office was ongoing and declined to elaborate.

The Justice Department said officials discovered that Latino drivers were four times to nine times more likely to be stopped than non-Latinos. Over a three-year period one-fifth of traffic stops violated the U.S. Constitution's Fourth Amendment protecting against unreasonable seizures, it said.

Political divisions run deep over the country's estimated 11 million illegal immigrants, especially in states such as Arizona that border Mexico.

Perez said the actions by the police force had created a "wall of distrust" between them and the community which made it harder for residents to come forward to report crimes or raise concerns.

The federal government is also examining allegations that Arpaio's deputies failed to adequately investigate sexual assaults - a concern raised last week by the state's two U.S. senators.

Arpaio's office has admitted that more than 400 cases of sexual assault and child molestation were not properly investigated between 2005 and 2007.

(Additional reporting by David Schwartz in Phoenix, Editing by Howard Goller and Cynthia Osterman)