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July 16 (Reuters) - The U.S. drug regulator said on Friday it will temporarily allow manufacturers to distribute the anti-smoking drug varenicline with elevated levels of an impurity that may cause cancer, to maintain availability after Pfizer Inc halted distribution of its Chantix branded varenicline.

Pfizer in June halted distribution of Chantix and recalled a number of lots after finding elevated levels of nitrosamines in the pills.

On Friday, it recalled 12 more lots.

The Food and Drug Administration (FDA) will temporarily allow some manufacturers to distribute varenicline containing impurities above its intake limit of 37 nanograms per day, but below an interim limit of 185 ng per day, until the impurity can be eliminated or reduced to acceptable levels.

The regulator said the health benefits of stopping smoking outweigh the cancer risk from the nitrosamine impurity in varenicline.

Canadian generic drugmaker Apotex will be temporarily allowed to distribute Apo-Varenicline tablets in the United States to help maintain adequate varenicline supply in the country for the near term, the FDA said.

The nitrosamine impurity, called N-nitroso-varenicline, may be associated with a potential increased cancer risk in humans, but there is no immediate risk to patients taking this medication, the FDA said.

Risk of exposure to the carcinogen at interim acceptable intake levels up to 185 ng per day presents minimal additional cancer risk, compared with a lifetime exposure at the 37 ng per day level, the agency said.

The FDA determined that varenicline recalled by Pfizer poses an unnecessary risk to patients and recommended healthcare professionals to consider other available treatment options.