WASHINGTON (Reuters) - Planned Parenthood would no longer accept reimbursement for fetal tissue donated for medical research after abortions, the women's healthcare provider said on Tuesday, a response to allegations by anti-abortion campaigners that it profited from abortions.

The policy change was announced amid a months-long controversy after the release of videos secretly recorded by anti-abortion activists that grew into demands by some Republicans in Congress to cut off funding to the group, even threatening a government shutdown last month.

Planned Parenthood said the videos inflamed anti-abortion sentiment in the United States and in Congress by falsely portraying its participation in tissue donation programs for medical research. The organization said it did not sell the tissue and only accepted reimbursement for handling it - a cost it would now bear itself.

"This removes beyond the shadow of a doubt the ludicrous idea that Planned Parenthood has any financial interest in fetal tissue donation – and shows the real agenda behind these attacks," Planned Parenthood President Cecile Richards said in a statement. Richards announced the policy change in a letter to the National Institutes of Health.

She characterized the videos and focus on Planned Parenthood as a "smokescreen" for a broader campaign against a woman's right to choose whether or not to have an abortion, which was approved by the U.S. Supreme Court in 1973.

Richards, who testified this month to the House Oversight Committee about Planned Parenthood's use of government funds, said only two of the organizations 700 health centers are involved in fetal tissue donations and that its previous policy of accepting handling fees was legal.

Representative Jason Chaffetz, chairman of the oversight committee, said the policy change was a good move but that Planned Parenthood's spending and federal support remained in question. Planned Parenthood receives about $500 million annually in federal funds, largely in Medicaid reimbursements.

(Writing by Bill Trott; Editing by Grant McCool)