(Updates with online announcement by interior secretary)

By Keith Coffman

DENVER, Sept 22 (Reuters) - A long-simmering debate in the American West over an imperiled ground-dwelling bird reached a climax on Tuesday as the Obama administration announced its decision to deny Endangered Species Act Protection to the greater sage grouse.

U.S. Interior Secretary Sally Jewell revealed the decision in a video statement posted online ahead of an appearance slated for later in the day at a wildlife refuge in Colorado with four Western governors to unveil a multi-state conservation strategy for the grouse.

The decision marks a turnabout of sorts from a 2010 finding by the U.S. Fish and Wildlife Service, an Interior Department agency, that Endangered Species Act protection was warranted but that other species were a higher priority.

Jewell said subsequent conservation planning by federal and state wildlife officials and commercial interests across the West now offered an alternative strategy for saving the grouse while allowing activities such as energy development, mining and ranching to co-exist with the chicken-sized prairie fowl.

"Because of an unprecedented effort by dozens of partners across 11 western states, the U.S. Fish and Wildlife Service has determined that the greater sage-grouse does not require protection under the Endangered Species Act," Jewell said.

The move was immediately hailed by the Denver-based industry group Western Energy Alliance. But whether the administration's approach finally settles the protracted dispute or prompts a new round of litigation will depend on the details.

A draft conservation plan outlined by the federal government in late May drew mixed reviews from environmentalists, with some saying the proposals offered too little protection and too many loopholes.

The plight of the grouse, a key indicator species for the vanishing sagebrush ecosystem of the American prairie, has pitted conservation groups against oil and gas drilling, wind farms, cattle grazing and housing development interests in one of the biggest industry-versus-nature controversies in decades.

Unlike many such battles of the past, commercial interests at odds with environmentalists have embraced conservation efforts aimed at staving off potentially tougher restrictions under the U.S. Endangered Species Act.

The greater sage grouse, known for elaborate courtship dances performed by males in spring, once ranged by the millions across a broad expanse of the western United States and Canada.

They are now believed to number between 200,000 and 500,000 birds in 11 Western states and southern Alberta. Wyoming accounts for about 40 percent of them. (Additoinal reporting by Laura Zuckerman in Salmon, Idaho; Writing and additional reporting by Steve Gorman in Los Angeles; Editing by Bill Trott and Eric Walsh)