RIO DE JANEIRO, Brazil (Reuters) - When the AIDS web epidemic first began spreading across the globe in the 1980's, Brazil was one of the worst hit countries. But it has since slowed the epidemic and become a model in the AIDS fight.

"South Africa was better off than Brazil in the 1980s but unlike them, we realised we had to act," Paulo Teixeira, head of the Brazilian Health Ministry's AIDS programme, told Reuters.

Now, as many as 25% of adults in South Africa are thought to be infected with HIV, compared with about 0.6% in Brazil.

"We stabilised AIDS and now we expect the rate to actually start declining," said Teixeira, who was in Rio de Janeiro this week to chair a forum on AIDS in Latin America.

From the beginning, Brazil defied the Roman Catholic church's anti-condom stance and launched an aggressive prevention programme that openly targeted everyone from gays to drug-using street kids to party-goers at Carnival festivals.

Large billboards and splashy television ads urged Brazilians to use condoms. This year, some 10 million "little shirts," as they are called, were distributed at Carnival and just this week, the government said it could spearhead a plan to hand out free needles.

Smart Use Of Funds

"Brazil has one of the best AIDS programmes in the world," UNAIDS executive director Peter Piot told Reuters. "They had an early response and funds went to where the problem was."

At the heart of Brazil's success is an even more controversial free drugs programme that has pitted the country against giant international pharmaceutical companies.

In 1994, the government urged Brazilian firms to start manufacturing AIDS drugs. The country now makes eight of the 12 antiretroviral drugs used in AIDS 'cocktails'. The prices on those drugs have plummeted more than 70%.

"Now we have to start producing the others even if that means breaking patent laws," Teixeira said. "We're going to try and negotiate, but if it doesn't work, the government will break the laws."

A typical treatment now costs about $4,500 a year in Brazil, compared to about $12,000 in the United States.

In Brazil, the government provides the drugs for free. In 2000, Brazil is spending $510 million on AIDS programmes and the lion's share of this funding will go toward treatment.

Brazil was chosen to host the first forum on AIDS in Latin America and the Caribbean this week and is leading efforts to buy AIDS drugs in bulk for the region and force prices down.

"A movement to democratize medicine on a global scale is needed," Health Minister Jose Serra said at the forum's opening session.

Still, Brazil is not resting on its laurels. The spread of AIDS has dropped off among gays and drug users, but a new study shows housewives in small towns are the latest victims. In December, the government will launch a campaign aimed at their philandering husbands.

"We're going to use billboards and magazines to tell them to be responsible, to use condoms instead of taking the infection home with them," Teixeira said.