SAN DIEGO (Reuters) - The commander of a group of U.S. Marines who were photographed in Afghanistan with what looks like a Nazi SS flag concluded they were acting out of ignorance rather than bigotry and decided not to punish them, a Marine Corps spokesman said on Thursday.

Outrage over the 2010 photo ricocheted around the Internet and threatened to snowball into the latest war-zone scandal for the Marine Corps, and at least one anti-discrimination group called for a Pentagon inquiry of the incident.

Master Gunnery Sergeant Mark Oliva, a Marine spokesman at Camp Pendleton in California, said the commander of the elite sniper team involved had investigated the matter and decided no disciplinary action was warranted.

"They didn't realize that they were associating themselves with something that was racist, fascist," Oliva said. "This was a chance to educate our young Marines about" the history of the Nazis and "the power of symbols."

The picture shows 10 armed and uniformed Marine snipers flanking an American flag above a dark-blue banner depicting in white the "lightning bolt" double-S symbol of the Schutzstaffel -- the Nazi paramilitary group that helped Hitler come to power and carried out some of the worst atrocities of the Holocaust.

"They saw 'SS' and associated it with 'scout sniper' rather than the Nazis," Oliva said.

The photo was apparently taken in the southern Afghan town of Sangin in September 2010 and came to the attention of the Marine Inspector General's office last November.

It was not clear how the Corps first became aware of the picture, but by then the commander of the Marines in the photo -- from the 1st Reconnaissance Battalion, 1st Marine Division, I Marine Expeditionary Force -- had decided to use the situation as a teachable moment.

"All Marines in the unit were reminded that any such behavior would not be tolerated and further display could result in punishment," the Marine Corps said in a statement.

Still, with the Defense Department already investigating a video that came to light last month of Marines urinating on the bodies of dead Taliban soldiers, furor over the SS photo could linger.

The Military Religious Freedom Foundation, an independent watchdog group that targets discrimination in the Armed Forces, called for Marine Corps Commandant General James Amos to order an investigation of the photo's origins.

"The fact that United States service personnel were caught proudly posing with the emblem of the Nazi SS, which symbolizes the vile ideology of Hitlerian fascism, sends a menacing signal to religious minorities within the United States Armed Forces," foundation President Michael Weinstein said.

"If these photographs are what they appear to be, we demand that you take all necessary action to see that they are removed from the Internet and that everyone associated with the matter, including anyone who condoned it, be the subject of immediate and public court-martial proceedings," Weinstein wrote in a letter to Amos, Defense Secretary Leon Panetta and General Martin Dempsey, chairman of the Joint Chiefs of Staff.

(Additional reporting by Marty Graham; Editing by Steve Gorman and Cynthia Johnston)

Mochila insert follows...