* EU sets three-month deadline for companies to show progress
* Says failure will result in enforceable legislation
* Recommends measures to halt proliferation of extremist content Says content should be removed within one hour of notification (Adds online trade association, counter extremist group)
BRUSSELS, March 1 (Reuters) - Google, YouTube, Facebook, Twitter and other internet companies must show the European Union within three months that they are removing extremist content more rapidly or face legislation forcing them to do so.
Several governments have increased pressure on social media companies to do more to remove illegal content -- from material related to groups such as Islamic state and incitement to commit atrocities -- and the sector has increased efforts to demonstrate its progress.
But in its strongest call yet to the technology sector the European Commission on Thursday recommended measures that internet platforms should take to stop the proliferation of extremist content, including the removal of such material within an hour of being notified of its existence.
European governments have said that extremist content on the web has influenced lone-wolf attackers who have killed people in several European cities after being radicalised.
"While several platforms have been removing more illegal content than ever before ... we still need to react faster against terrorist propaganda and other illegal content which is a serious threat to our citizens' security, safety and fundamental rights," Digital Commissioner Andrus Ansip said in Thursday's statement.
European online trade association EDiMA, whose members include Google, Facebook and Twitter, said it was dismayed the Commission had not first chosen to engage in dialogue. A one-hour turn-around time might also not be workable, it said.
The recommendation, which is non-binding but could be taken into account by European courts, sets guidelines on how companies should remove illegal content generally -- from copyright infringements to hate speech -- and advises a quicker reaction to extremist material.
The Commission said it would assess the need for legislation within three months for what it described as "terrorist content", given the urgency of the issue. For all other types of illegal content it will assess progress made within six months.
It also called on the technology sector, which is dominated by U.S. companies, to adopt proactive measures such as automated detection to rid their platforms of illegal content.
Campaign group the Counter Extremism Project said the Commission's proposal was welcome but did not tackle two issues - how to make automated technology widely available and how to stop extremists uploading again content that had been removed.
European Digital Rights, a civil rights group, described the Commission's approach as putting internet giants in charge of censoring Europe. Only legislation would ensure democratic scrutiny and judicial review.
Luxury groups, meanwhile, welcomed the Commission's move saying action by online platforms is also necessary to fight the sale of counterfeit goods online.
"Proactive measures coupled with good consumer information is the only way to effectively deal with illegal content online," said Toni Belloni, group managing director of LVMH . (Reporting by Julia Fioretti; Editing by Philip Blenkinsop and Toby Chopra)