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The house of Carlos Augusto and Sandra Regina (not pictured) who have lived in Vila Autodromo slum for 20 years with their children, is demolished after the family moved to one of the twenty houses built for the residents who refused to leave the community, in Rio de Janeiro, Brazil, August 2, 2016. REUTERS/Ricardo Moraes

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By Ricardo Moraes and Daniel Flynn

RIO DE JANEIRO (Reuters) - In an unfinished church in the shadow of the Olympic village in Rio de Janeiro, a small group of Brazilians held hands and gave thanks for a victory in a long battle against eviction from their homes.

With scaffolding covering a mural behind the altar, a priest led a dozen residents of the once-thriving Vila Autodromo fishing community in a prayer for the aid workers who had supported their struggle to remain.

For most, the victory is bittersweet. Their quiet community among the trees, once home to 600 families, has been bulldozed to make way for a parking lot and access roads to the Olympic park.

In its place, two neat rows of identical whitewashed houses stare at each other across a newly tarred road, home to the 20 families who resisted pressure from authorities to accept compensation or relocation to nearby tower blocks.

"It was a very difficult fight. Above all, it was God who helped us," said Denise Costa dos Santos, leaving the church. A day before, the slight 66-year-old had watched her home of 26 years, one of the last houses still standing, be flattened by the claw of a mechanical digger.

"The new houses are better. My old house was rickety, but it was still full of memories," she said.

Dos Santos has no kind words for Rio Mayor Eduardo Paes, whose administration relocated tens of thousands of people in the buildup to the first Olympics to be hosted in South America, which open on Friday.

Though it lacked regular sanitation, the community of Vila Autodromo was free of the drug trafficking and violence that plagues many of the poor neighbourhoods nearer the centre of Rio. One-fifth of the city's 6 million people live in slums.

Most of the $12 billion price tag for Rio's Olympics was funded by private investment, in return for development rights for the land and property. The nearby Olympic Village will be sold off as luxury housing after the Games.

Creeping gentrification had turned the western Rio neighbourhood of Barra, where the Games will be held, into an expanse of shopping malls, luxury condominiums and highways.

After Rio won the Games in 2009, families in Vila Autodromo were told that their homes were on land needed for access roads, parking or landscaping of the border of the Jacarepagua lagoon next to the Olympic stadiums. They were offered new public housing a couple of miles away or financial compensation.

"It wasn't easy for us and so we feel proud about this victory," said Maria Adriana, standing in front of the lawn of her new home. "We're staying here because it's what we wanted all along."

Yet all is not perfect. A few metres away, a fetid black canal is strewn with rubbish, its surface alive with insects - a sign of the problems with water pollution in Rio that have dogged the Games.

The deployment of hundreds of municipal guards to evict the residents of Vila Autodromo this year generated criticism of Rio's heavy-handed tactics in preparing for the Games.

Carlos Augosto, a 53-year-old with white hair and a white moustache, shakes his head as a carries a microwave in a wheelbarrow from his old house to his new one.

"We are angry about the way in which things were done. It was brutal," he said, passing the wall of his house painted with a Brazilian flag and the slogan 'memory cannot be evicted'.

"The community won't be like it was before because it is much smaller but the good side of things is that only the warriors remained."

Marcia Lemos, a saleswoman, is the last resident remaining who has not reached a deal with authorities, rejecting an offer of compensation she says is worth less than half what her home was worth.

She owned a property on the side of the lagoon with a swimming pool and fruit trees, but left in October when authorities turned off the water and electricity. She now lives in a small rented apartment in western Rio with her mother and three children.

"I will keep fighting and, if I die, my children and grandchildren will keep fighting," she said.

(Writing by Daniel Flynn; Editing by Meredith Mazzilli)

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