BEIJING (Reuters) - The health of a jailed Buddhist Chinese dissident outspoken on Tibet and other sensitive topics is poor and he is not being allowed to communicate freely with his family, according to a source who met him recently.

Hu Jia was found guilty of "inciting subversion of state power" in April for criticising the ruling Communist Party, a verdict that drew quick condemnation from the United States, Britain and the United Nations.

He is now serving a three-and-a-half year sentence in a prison in Beijing's neighbouring city of Tianjin, and has been mentioned as a potential winner of this year's Nobel Peace Prize.

A source close to the activist who asked not to be identified and who was allowed to see Hu this week, said that although he was apparently not being beaten, Hu had been placed in solitary confinement in chains at least once.

"Because Hu Jia spread discussion of human rights amongst prisoners that was not beneficial to the management of the jail, he was placed in solitary confinement for a day on August 13, shut in a cell for 24 hours in handcuffs and leg chains," the source said, citing prison officials.

Other prisoners are not allowed to lend Hu reading materials, and his letters to his family are read by prison officials who demand rewrites if they are not satisfied with the contents, the source added.

As Hu is a devout Buddhist, he sticks to a strict vegetarian diet, which is causing nutritional problems for him in jail, the source said.

"I saw that his gums were pale, and I'm worried that he is anaemic and malnourished," the source added.

Because of Hu's health, he is not being given any strenuous labour to do, the source said.

Jail officials could not immediately be reached for comment.

Starting with advocacy for rural AIDS sufferers, Hu emerged as one of the nation's most vocal advocates of democratic rights, religious freedom and self-determination for Tibet, shaken by protests and a security crackdown earlier this year.

Hu was detained in late December after spending more than 200 days under house arrest in a Beijing apartment complex.