By Paul Taylor and Omar Fahmy

CAIRO, April 28 (Reuters) - Egyptian President Mohamed Mursi and top judges agreed on Sunday to seek a compromise to defuse a battle over Islamist attempts to force out thousands of judges that have deeply polarised the Arab world's most populous nation.

Mursi's Islamist allies had proposed legislation to purge more than 3,000 judges at a stroke by reducing their mandatory retirement age to 60 from 70 to sweep away senior jurists appointed under autocratic former President Hosni Mubarak.

But after nearly three hours of talks, the president's office and the Supreme Judicial Council said they had agreed to launch a conference on the future of the justice system that would work out a reform acceptable to both sides.

The deal appeared to be a significant climbdown by the ruling Muslim Brotherhood in the face of fierce resistance to its push for a fast-track law to "cleanse the judiciary".

A presidential spokesman said in a statement read on state television that Mursi had praised the idea of a justice conference and would start preparatory sessions at the presidency on Tuesday.

Mursi would "personally adopt all the conclusions of this conference from project laws to present it to the legislative council," he said.

Mohamed Mumtaz, president of the Supreme Judicial Council, gave an almost identically worded statement.

A judicial source said discussion of the Islamist draft law that sparked an outcry among judges, lawyers, opposition parties and civil rights groups, would be frozen until after the conference and the president would present a new draft.

REMNANTS OR SAVIOURS?

The Brotherhood accuses many judges of being remnants of the previous regime, who abuse their position to obstruct elections and laws proposed by bodies elected since the uprising that overthrew Mubarak in 2011, and of frustrating efforts to bring corrupt former officials to justice.

The secular, liberal and left-wing opposition, as well as ultra-conservative Salafi Islamists, charge that the Muslim Brotherhood is trying to monopolise power by purging independent judges to make way for its own place men in key courts.

The opposition is also demanding the removal of Prosecutor General Talaat Ibrahim, whose appointment by Mursi was ruled illegal by an appeals court. Ibrahim, accused of bias towards the Islamists in his conduct, is appealing against the ruling.

Several thousand judges held a protest rally last week to denounce the planned amendment of the Judicial Authority Law in the upper house of parliament as unconstitutional.

But the floor leader of the Brotherhood's Freedom and Justice Party, Essam El-Arian, said on Friday lawmakers should press ahead with the new law without delay.

The battle over the judiciary has triggered street violence with the Brotherhood holding a mass demonstration on April 19 to demand a "cleansing of the judiciary" that ended in clashes. (Editing by Robin Pomeroy)