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ROME (Reuters) - Italian mafia have infiltrated one of Europe's largest reception centres for migrants, creaming off state funds that were earmarked for the care of new arrivals, prosecutors said on Monday.

Police arrested 68 people in early morning raids in the southern toe of Italy, including a priest and the head of a Roman Catholic association that runs the Sant'Anna Cara immigrant centre in the town of Isola Capo Rizzuto.

Amongst the accusations levelled against those detained were involvement in a mafia organisation, extortion, misappropriation of state funds and fraud, said a statement from police in the southern city of Catanzaro.

There was no immediate response from those arrested.

The head of parliament's anti-mafia commission hailed the operation. "The Cara of Isola Capo Rizzuto had become a money printing operation for organised crime thanks to the complicity of those who ran the centre," Rosy Bindi said.

"This operation shows the ability of the mafia to take advantage of the weaknesses and fragility of our times with its predatory and parasitic approach," she added.

Police said many of those arrested belonged to the Arena clan of the 'Ndrangheta mafia -- Italy's most powerful organised crime group and one of Europe's biggest cocaine importers.

The police statement said the Arena clan was suspected of winning contracts to provide catering for migrants both in the Isola Capo Rizzuto centre and on the southern island of Lampedusa, which is on the front line of the migrant crisis.

More than half a million migrants have reached Italy since 2014, mostly by boat from neighbouring Libya. The government has set up reception centres across the country to take care of the new arrivals.

The Isola Capo Rizzuto centre has room for more than 1,200 people, making it one of the largest in the country. The state gives it some 16 million euros ($17.5 million) a year to house and feed the migrants.

(Reporting by Crispian Balmer; Editing by Mark Trevelyan)

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