By Jeremy Clarke

NAIROBI, Oct 6 (Reuters) - An Ethiopian rebel group applauded on Saturday a bill passed by the U.S House of Representatives that would force their government to make democratic reforms or else lose security aid.

The group, the Oromo Liberation Front (OLF), are armed rebels fighting for greater autonomy in ethnically Oromo parts of the vast Horn of Africa nation.

"We believe the Oromo people would have everything to gain and nothing to lose from the advancement of human rights, democracy, independence of the judiciary and the supremacy of the rule of law and freedom of the press, which (the bill) calls for," the OLF statement said.

"The bill...(highlights) the Ethiopian government's large-scale human rights violations," the OLF added, calling for the U.S. Senate and president to sign the bill into law.

The bill also backs the release of Ethiopian political prisoners, of whom more than 80 percent are ethnic Oromo detained under false charges, the OLF said.

The bill, passed this week by the House of Representatives, threatens to deny U.S. entry visas to officials deemed involved in human rights violations.

Another rebel group, the Ogaden National Liberation Front (ONLF), has also welcomed the bill.

But the Ethiopian government has reacted angrily, saying that if it passes into law, it will threaten regional stability and Addis Ababa's close ties with Washington.

Ethiopia is the U.S. government's main security partner in the region, and as such, the bill exempts counter-terrorism operations from any funding restrictions.

The bill has surfaced nearly two years after violent protests over May 2005 election results killed nearly 200 when protesters claiming vote-rigging clashed with security forces.

That, and a subsequent trial of opposition members including those who won seats in parliament and other positions, led to rights criticism and the withholding of some Western aid.

Once a darling of the West, former guerrilla leader Prime Minister Meles Zenawi's reputation has suffered badly from rights concerns in recent years, including his prosecution of a military campaign against the ONLF this year.

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