Reuters) - A federal lawsuit stemming from the Occupy movement more than three years ago has led to a sprawling homelessness protest in Tucson, Arizona, that has scores of people living in coffin-like plywood sidewalk "pods," and the county citing the city for human waste and loose dogs.

The demonstration is aimed at the "decriminalization" of homelessness, said Jon McLane, an Occupy organizer who sued Tucson in 2011 saying the city's arrest of sidewalk campers violated the constitutional right to protest on public property.

McLane later founded Safe Park LLC, an organization that aims to convince the Tucson authorities to provide camping space and restrooms for the homeless. It is modeled on a similar project in Portland, Oregon.

"We don't need all the bells and whistles. We just don't want it to be a crime to be homeless," said McLane, an Iraq War veteran who has lived on the streets since the Occupy movement and ran unsuccessfully for mayor in 2011.

City Council member Regina Romero agrees homelessness should not be treated as a crime, but she thinks the protest has gone too far and is affecting downtown businesses.

"The pods and tents and chairs have gone beyond free speech. It's becoming an infringement on others' rights," Romero said.

On Wednesday, the Pima County Health Department cited the city over human waste and loose dogs associated with the campers. The city then erected a temporary fence to block access to a pit area which people had been using as a restroom.

A hearing in the federal lawsuit on Tuesday could decide the fate of the protest, with the city calling for clarification of a temporary injunction allowing the campers.

The stalemate began after Tucson issued hundreds of citations to Occupy campers in 2011, many in the park where some pods now sit. The Occupy organizers sued, and the court's temporary injunction has let them remain.

One of the roughly 75 campers, who only gave his middle name, Tennell, said he has been homeless about two months and was sleeping in a ditch before he moved into a pod.

Although it is too small to sit upright in, it is somewhere to lock things while he is in business management classes at ITT Technical College.

"It might not seem like much to other people, but this means a lot to us, to people who don't have nothing," he said.

(Reporting by Brad Poole; Editing by Daniel Wallis and Lisa Lambert)