By Mike Spector and Dietrich Knauth

(Reuters) -Johnson & Johnson plans to pay an additional $1.1 billion to resolve tens of thousands of legal actions alleging its baby powder and other talc products caused cancer, two people familiar with the matter said.

The increase would boost the size of the settlement to more than $9 billion paid over 25 years. J&J on Wednesday said it reached an agreement with a plaintiffs' lawyer representing 12,000 clients to recommend the settlement offer to them, adding to support already received from other claimants.

The healthcare giant is preparing to have a subsidiary declare bankruptcy to finalize the proposed settlement before the end of this month, one of the people said. J&J would continue operating without filing for Chapter 11. The company maintains its talc products are safe and do not cause cancer.

The timing of a bankruptcy filing could change depending on how the counting of additional votes unfolds.

J&J said Allen Smith, the plaintiffs' lawyer now supporting its plan, agreed to the settlement offer in exchange for "additional monetary and non-monetary benefits for all talc claimants" in a bankruptcy plan it expects a judge to later approve.

J&J declined to comment on the amount of additional money it plans to pay and did not respond to an inquiry regarding the timetable for a subsidiary filing for bankruptcy protection.

The company earlier this summer gave talc claimants until July 26 to vote on its proposed bankruptcy settlement. In August, J&J allowed claimants additional time at the request of plaintiffs' lawyers including Smith, the company said.

J&J's current settlement offer is "the best and most realistic option available for claimants to recover for their claims in a timely manner," Smith said in a J&J news release Wednesday.

With votes from Smith's clients, J&J expects to garner support from more than 75% of claimants alleging the company's talc sickened them. Support from 75% of claimants is the legally required threshold for a judge to approve the kind of bankruptcy settlement J&J has proposed. The additional votes will put J&J "well above" that bar, the company said.

J&J faces talc lawsuits from more than 62,000 plaintiffs, according to a company filing. But the figure swells as high as 100,000 when counting claimants who haven't sued, Erik Haas, J&J's global vice president of litigation, has said.

Some lawyers representing cancer victims oppose J&J's plan to resolve the litigation and are locked in a bitter battle with the company.

Andy Birchfield, one of the leading opponents, said his law firm shares representation of a "substantial number" of clients with Smith through a joint agreement. Those clients have already "overwhelmingly rejected" J&J's settlement offer and Birchfield will continue opposing the company's bankruptcy plan alongside other attorneys, he said.

J&J has previously described its settlement offer as having a net present value of about $6.48 billion with the amount of actual cash paid over 25 years totaling $8 billion. The increased payout J&J is planning raises the latter figure above $9 billion.

After being rebuffed twice by federal courts, J&J is attempting again to end the talc litigation in a so-called "Texas two-step" bankruptcy.

The two-step maneuver involves offloading its talc liability onto a newly created subsidiary, which then declares Chapter 11. The goal is to use the proceeding to force all claimants into one settlement without requiring J&J to file bankruptcy itself.

J&J's latest settlement offer addresses allegations talc caused ovarian and other gynecological cancers, which are the bulk of the claims J&J faces.

It excludes other claims, including those from plaintiffs alleging asbestos-laced talc caused their mesothelioma, a deadly cancer that attacks a thin layer of tissue that covers many internal organs. J&J says its talc does not contain asbestos.

(Reporting by Mike Spector and Dietrich Knauth in New York and Sriparna Roy in Bengaluru; Editing by Shinjini Ganguli, Bill Berkrot, Marguerita Choy and Lincoln Feast.)