By Susan Heavey

WASHINGTON (Reuters) - The U.S. Senate began debate Tuesday on whether to grant the Food and Drug Administration new powers to regulate tobacco products, a proposal that has divided the cigarette industry.

A bill written by Democrats would let the FDA oversee the packaging, marketing and manufacturing of cigarettes and other tobacco products, which have been linked to cancer and other illnesses and kill 400,000 Americans each year.

In an 84-11 procedural vote, the Senate agreed to start debate, which could continue into next week. Democrats have said they have enough votes to approve the tobacco legislation but the margin could be slim.

Reaction from tobacco companies has been mixed. Altria Group Inc's Philip Morris unit, the nation's largest cigarette maker, supports the bill. But several other companies, such as Reynolds American Inc's R.J. Reynolds Tobacco unit and Lorillard Inc's Lorillard Tobacco Co, do not.

President Barack Obama, who has publicly admitted his own struggles to quit smoking, has said he supports the measure. FDA Commissioner Margaret Hamburg also backs it, as do many advocacy groups such as the American Cancer Society.

A similar proposal has already passed the U.S. House of Representatives. Differences between the House and Senate versions would have to be worked out by congressional negotiators before a final bill could be signed into law by Obama.

Supporters of the bill say the new oversight will curb the tobacco industry's heavy marketing, which critics charge encourages children to smoke.

"Every day... another 3,500 to 4,000 children are ensnared by tobacco products (and) targeted with impunity as they try tobacco products for the first time," said Democratic Senator Christopher Dodd, who helped push the bill through the Health, Education, Labor and Pensions Committee.

Lawmakers plan to pay for a new FDA tobacco division by imposing fees on companies, which must register with the agency and provide it with a list of all the products they make.

A report by the Congressional Budget Office, a nonpartisan agency that analyzes legislation, said the bill would add an additional $900 million to the U.S. budget deficit between 2010 and 2019, adding that it is difficult to assess the financial impact reduced tobacco use would have on healthcare costs.

Opponents of the bill say money would be better spent on programs aimed directly at getting Americans to stop smoking. Some smaller tobacco manufacturers also say the requirements are a burden.

Senator Mike Enzi, the health panel's top Republican, said he "is no friend of tobacco" but opposes the bill. He said a court ruling last month would already impose curbs on cigarette marketing similar to those in the legislation.

A U.S. appeals court said in May that cigarette makers were guilty of lying to hide the dangers of smoking, and called for an end to labels such as "light" and "low tar," aimed at making consumers think some cigarettes were healthier than others.

"There's enough information out there that can tell you that this will kill you," Enzi said on the Senate floor.

The Senate proposal would also require the FDA to oversee a growing number of other tobacco products, including dissolvable tablets, strips and toothpick-like sticks.

(Reporting by Susan Heavey; Editing by Tim Dobbyn)