Organizers of the New York Puerto Rican Day Parade, one of the largest U.S. outdoor events, said they are ending a 30-year relationship with the makers of Captain Morgan Rum citing Diageo PLC's plans to move distillation of the drink from Puerto Rico.

The decision to end the long standing sponsorship agreement for the country's biggest Puerto Rican day parade, is the latest turn in a controversy surrounding the British distiller's decision to move its distillery for the rum to St. Croix, part of the U.S. Virgin Islands (USVI).

It follows Diageo's accusation of rival Bacardi Ltd of leading a hidden campaign to drive Diageo's Captain Morgan rum production out of the USVI.

Diageo has a deal with the USVI involving a new rum distillation facility on St. Croix where it will produce Captain Morgan rum for at least 30 years, starting from 2012 when its contract with Puerto Rican rum producer Destileria Serralles runs out.

The parade organizers said they were ending the sponsorship in a joint statement with the National Puerto Rican Coalition (NPRC). Diageo, which was not immediately available for comment Friday, has accused Bacardi of being behind public comments made by the NPRC.

The statement released on Sunday cited a NPRC comment made in February that Diageo would get $2.7 billion in U.S. taxpayer-funded subsidies for the move to St Croix.

The corporate sponsorships of Captain Morgan and its British Parent Diageo PLC, are no longer welcome, Parade Chairwoman Madelyn Lugo said in a statement. They are abandoning us in exchange for $2.7 billion in taxpayer-funded corporate handouts that would otherwise be used to meet the educational and health needs of Puerto Rico.

The New York Puerto Rican day parade typically attracts more than 2 million participants and its organizers said it is the largest Puerto Rican day parade in the United States and Puerto Rico itself.

They said they hope that the decision would put pressure on New York Senators Charles Schumer and Kirsten Gillibrand to make a stand against Diageo's move.

(Reporting by Sinead Carew; Editing by Diane Craft)