ISTANBUL (Reuters) - Turkey has drafted changes to the penal code, narrowing the definition of terrorist propaganda in a step to boost freedom of expression in line with EU demands and potentially encourage a fledgling peace process with a jailed Kurdish militant leader.

The bill, presented to Prime Minister Tayyip Erdogan on Tuesday and likely to be sent to parliament this month, may lead to the release of defendants accused of links to Kurdish rebels, a justice ministry official told Reuters on Wednesday.

Turkey has used anti-terror legislation widely to prosecute thousands of politicians, activists and journalists, frequently for things they have said or written.

Turkey regularly tops the list of countries violating the European Convention of Human Rights and the European Commission has called on Ankara to amend its laws to distinguish between incitement to violence and expression of non-violent ideas.

"Regulations have been prepared which rescue this country from such trouble ... opening the way for freedom of expression and thought in Turkey," Justice Minister Sadullah Ergin said.

The reform was in line with European Court of Human Rights criteria, under which only a direct incitement to violence constitutes a crime, he told reporters.

"When a person shares an idea and writes it down, if it does not contain, inspire, incite or try to legitimize violence, how can somebody be convicted?" the minister said.

If approved, the legislation is likely to be welcomed by Europe, which frequently criticizes Ankara's human rights record and imprisonment of political activists and journalists.

Under the current anti-terrorism law and criminal code, writing an article or making a speech can lead to long prison sentences for membership of a terrorist group.

Thousands of Kurdish politicians and activists have been prosecuted since 2009 over alleged links to the Kurdistan Workers Party (PKK) - deemed a terrorist group by the EU and Washington, as well as Turkey.

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Turkey moves to boost freedom of expression