UPDATE 1-Obama to Drop U.S. Threat of Prosecution over Hostage Ransom -N.Y. Times

(Adds White House plans announcement, details from newspaper report, paragraphs 2-6)

WASHINGTON, June 23 (Reuters) - President Barack Obama has decided the U.S. government will stop threatening criminal prosecution of families who try to pay ransom to win the release of American hostages held by militant groups overseas, the New York Times reported on Tuesday.

The White House on Wednesday will announce the results of a six-month review of how the government works with families of hostages, an administration official told Reuters on Tuesday, declining comment on the details of the review.

The Times, citing an unnamed senior administration official, reported that Obama, in a presidential directive and an executive order, plans to keep a longstanding American government prohibition on making concessions to hostage-takers.

But it reported that Obama has decided the U.S. government can communicate and negotiate with those holding Americans or assist family members aiming to do so to gain their safe return.

Some families of U.S. hostages, including those who have been killed by hostage takers in captivity, have been sharply critical of U.S. government policies toward handling hostage situations.

U.S. officials have told the families of hostages taken by groups like Islamic State and al Qaeda that the American "no-concessions" policy prohibited them even from talking about possible terms of release and that families could face criminal charges for offering ransom. (Reporting by Roberta Rampton and Will Dunham; Editing by Bill Trott)