* State inquiry finds "no improper use of public funds"

* Sanford facing growing calls to resign over affair

* Scandal adds to Republican Party political woes

By Matthew Bigg

ATLANTA, July 2 (Reuters) - South Carolina Governor Mark Sanford, who faces growing calls to quit over his affair with an Argentine woman, did not misuse public funds in trips he made to see his mistress, the state's top police official said on Thursday.

The announcement by South Carolina Law Enforcement Division (SLED) director Reggie Lloyd gave some relief to the embattled Republican governor, who has 18 months remaining of his term.

"SLED at this time will say that in regards to this relationship, we have found no improper use of public funds," Lloyd told a news conference in the state capital Columbia. He said Sanford had cooperated with the investigation.

A number of Republican colleagues and allies of 49-year-old Sanford have urged him to step down after the emotional public confessions he has made about his affair with a Buenos Aires businesswoman, including a secret trip to Argentina over the Father's Day weekend.

Sanford, a father of four, had agreed a trial separation from his wife Jenny.