* Manhunt for Christopher Dorner called largest in L.A. history
* Police chief says investigators making progress in search (Adds latest unconfirmed sighting and search for suspect in L.A.)
By Brandon Lowrey
LOS ANGELES, Feb 10 (Reuters) - A record $1 million reward was posted on Sunday for information leading to the capture of a fugitive former Los Angeles policeman suspected of targeting police officers and their families in three killings committed in retaliation for his 2008 firing.
Los Angeles Police Department Chief Charlie Beck said the reward, raised from private donations, police unions, businesses and city and county governments, marks the largest sum ever offered in Southern California in a criminal investigation.
The reward was posted as law enforcement agencies across the region pressed on for a fourth day in their search for the suspect, ex-LAPD officer and U.S. Navy reservist Christopher Dorner, 33. Beck described it as the most extensive manhunt ever mounted in the Los Angeles area.
He called the spate of revenge-driven violence Dorner is accused of committing "an act of domestic terrorism."
"This is a man who has targeted those who we entrust to protect the public. His actions cannot go unanswered," Beck said.
At a news conference, Beck said investigators were making progress but he declined to elaborate, saying they presumed that if Dorner is still alive, he would be following media coverage of the manhunt closely.
Los Angeles Mayor Antonio Villaraigosa added, "Our dedication to catching this killer remains steadfast, our confidence in bringing him to justice remains unshaken."
An LAPD spokesman also said police would be providing extra security for the recording industry's Grammy Awards ceremony on Sunday at the Staples Center in downtown Los Angles.
The search for Dorner has been focused in the snow-covered San Bernardino Mountains northeast of Los Angeles since a pickup truck belonging to Dorner was found abandoned and burning near the popular ski resort community of Big Bear Lake on Thursday.
Police throughout the region also have chased down numerous unconfirmed sightings and dead-end leads.
One of the latest of those, prompted by calls from two individuals reporting they had seen someone resembling Dorner, led police on Sunday to a hardware store in L.A.'s San Fernando Valley community of Northridge.
The store was evacuated and searched, but no evidence of Dorner's presence was uncovered, police said.
His last confirmed encounters with authorities came early on Thursday in two Riverside County towns east of Los Angeles, police said. He is accused of exchanging gunfire with a pair of police officers in Corona, injuring one, and later ambushing two policemen at a stoplight in Riverside. One of those officers was killed, the other wounded.
A rambling manifesto posted on Dorner's Facebook page last week claimed he was wrongly terminated from the LAPD in September 2008 and vowed to seek revenge by unleashing "unconventional and asymmetrical warfare" on police officers and their families.
A former Navy lieutenant, Dorner was named as a suspect in last weekend's slayings of a campus security officer and his fiance, the daughter of a retired Los Angeles police captain blamed in Dorner's manifesto for his dismissal. The couple, Keith Lawrence, 27, and Monica Quan, 28, were found shot dead last Sunday in their car on the top level of a parking structure in the city of Irvine, south of Los Angeles.
Dorner had ended his military service two days earlier, but the Navy has not disclosed the circumstances of his discharge.
Quan's father, Randy, had represented Dorner in disciplinary proceedings that led to his dismissal from the LAPD after a police inquiry found he had made false statements accusing a superior officer of using excessive force against a homeless person.
Beck announced on Saturday a reopening of the inquiry to "reassure the public that their police department is transparent and fair."
The LAPD also has launched an inquiry into a police shooting in which two women were wounded when officers opened fire on a pickup truck resembling Dorner's vehicle in a case of mistaken identity on Thursday. The two women, one of them aged 71, were delivering newspapers when they were shot.
The police officer who was killed in an ambush that morning was publicly identified on Sunday as Michael Crain, 34, a U.S. Marine Corps veteran who served in the Riverside Police Department for 11 years.
LAPD spokesman Andrew Smith said "an army" of police officers would be providing security for a public memorial service planned for Crain on Wednesday.
In addition to keeping up the manhunt in and around Big Bear Lake, police were searching areas around the homes of more than 50 Los Angeles police officers whose families authorities believe Dorner has targeted as potential victims. (Additional reporting and writing by Steve Gorman. Editing by Christopher Wilson)