* De La Rue says Franco-Dutch firm awarded contract
* UK firm says made highest quality, if not lowest cost, bid
* Government gives De La Rue longer to appeal the decision
* Petition to stick with British company tops 270,000 (Adds government, union reaction)
By Alistair Smout
LONDON, April 3 (Reuters) - The company that makes British passports will challenge the decision to use a foreign firm in future, a government decision that some eurosceptics in the tabloid press have called unpatriotic.
Prime Minister Theresa May announced post-Brexit Britain would change its passports from burgundy to blue - closer to how they looked before the colour of EU passports was harmonised in 1988 - in "an expression of our independence and sovereignty".
But reports that Franco-Dutch firm Gemalto, rather than Britain's De La Rue Plc, had won the tender to produce them angered some Britons and the Daily Mail said more than 270,000 people had signed its petition demanding the contract go to a British company.
Gemalto, which already produces British driving licenses, has not confirmed or denied it won the contract, but De La Rue has publically criticised the decision to use a foreign firm.
It said it would seek a judicial review of the tender decision as it believes it made "the highest quality and technically most secure bid."
The Daily Mail applauded De La Rue for "coming out fighting" and urged the government to "put security and patriotism first" by reversing its decision.
A spokesman for May said the standstill period - between a contract being awarded and its final conclusion - had been extended due to De La Rue's request, but the government had not changed its stance.
"This has been a rigorous, fair and open competition. The preferred bidder demonstrated they are best able to meet the needs of the passport service," he said.
The passport issue has proved uncomfortable for May as she fends off accusation from hardliners in her own party that she will settle for a "soft" Brexit deal that could leave Britain still confined by many EU rules, which include open competition for public contracts.
Anti-Brexit figures have pointed out that Britain had never been obliged to make its passports burgundy and that one EU member, Croatia, already has blue passports. And, in an April Fools joke, the European Parliament tweeted on Sunday that the EU had decided to make all EU passports blue.
De La Rue's contract, which ends in July 2019, is worth 400 million pounds ($562 million). The new contract will start in October 2019, after Britain leaves the EU in March.
Shares in De La Rue were little changed on Tuesday, having fallen 6 percent when it said it had lost the contract in March.
Britain's biggest trade union Unite said it supported De La Rue's legal challenge as it was concerned about manufacturing jobs. (Reporting by Alistair Smout Editing by Guy Faulconbridge and Robin Pomeroy)