WASHINGTON (Reuters) - The Obama administration on Monday appealed a decision that found unconstitutional a U.S. Food and Drug Administration regulation requiring tobacco companies to put large, graphic health warnings on cigarette packages and advertising.

U.S. District Judge Richard Leon last week ruled that requiring tobacco companies to use the graphic labels, which included images of rotting teeth and diseased lungs, was a violation of their free-speech rights under the Constitution.

The government has failed to carry both its burden of demonstrating a compelling interest and its burden of demonstrating that the rule is narrowly tailored to achieve a constitutionally permissible form of compelled commercial speech, Leon said in the February 29 ruling.

He found that the warning labels were too big and that the government has numerous other tools at its disposal to deter smoking, such as raising cigarette taxes or including simple factual information on the labels rather than gruesome images.

The Obama administration on Monday filed its appeal with the U.S. Court of Appeals for the District of Columbia Circuit.

Congress passed a law in 2009 ordering the FDA to adopt the label regulation, which requires color warning labels big enough to cover the top 50 percent of a cigarette pack's front and back panels, and the top 20 percent of print advertisements.

The FDA released nine new warnings in June 2011 to go into effect in September 2012, the first change in U.S. cigarette warning labels in 25 years. Cigarette packs already carry text warnings from the U.S. Surgeon General.

Reynolds American Inc's R.J. Reynolds unit, Lorillard Inc, Liggett Group LLC, Commonwealth Brands Inc, which is owned by Britain's Imperial Tobacco Group Plc, and Santa Fe Natural Tobacco Co Inc challenged the rule, arguing it would force them to engage in anti-smoking advocacy against their own legal products.

Leon granted a stay blocking the rules from taking effect, a decision the Obama administration had already appealed.

The original case was R.J. Reynolds Tobacco Co et al v. U.S. Food and Drug Administration et al in U.S. District Court for the District of Columbia, No. 11-cv-1482.

(Editing by Carol Bishopric and Richard Chang)