DUBLIN (Reuters) - The fall in lending to Ireland's private sector accelerated in September as banks wrote down loans and increased provisions for bad debts in worsening economic conditions, the central bank said on Friday.

The stock of private sector credit (PSC) fell by an adjusted 3.4 percent compared with a 3 percent fall in August when the bank highlighted similar pressures on the provision of credit.

September was the fourth consecutive month of year-on-year decline after figures turned negative for the first time since records began in June.

The continued slide comes as the government attempts to kick-start the flow of credit through plans for a "bad bank" to purge its lenders of risky property assets.

Private sector credit declined by 4.4 billion euros (3.9 billion pounds) in September following a decline of 1.5 billion euros in August.

Last week an Irish minister said banks were not delivering on their promise to loosen credit to small and medium size businesses in return for state rescue packages.

Allied Irish Banks (ALBK.I: Quote, Profile, Research), which is expected to transfer 24 billion euros of loans to the National Asset Management Agency (NAMA), the bad bank, said it was increasing lending to SMEs.

"AIB Bank has approved 42,000 loan and overdraft facilities totalling 1.85 billion euros for Irish SMEs so far this year," it said in a statement. "We are making progress ... we know that there is more work to be done."

Ireland's residential mortgage lending, which accounts for about 85 percent of household lending from Irish resident credit institutions, declined by 14 million euros in September, pushing the year-on-year growth to just 0.3 percent from 0.8 percent in August.

(Reporting by Andras Gergely; Editing by Andy Bruce)