NAIROBI, Sept 27 (Reuters) - The United States has given Kenya $500 million in grants this year for education, health and good governance, and to strengthen procurement rules, the U.S. ambassador said on Thursday.

This was an increase from about $42 million given five years ago, when most Western donors had drastically reduced their funding because of rampant corruption under former President Daniel arap Moi.

"The total funding this year coming from the U.S. government is about $500 million. That funding is projected to increase next year," U.S. ambassador Michael Ranneberger told a news conference.

He spoke after signing an aid package worth $30 million for HIV/AIDS treatment and free education.

Some of the funds given this year would be used to enhance democracy and improve transparency and governance, he said.

Ranneberger urged President Mwai Kibaki not to sign a bill passed by parliament restricting the powers of the national corruption watchdog to investigate cases dating from before 2003.

Earlier this month, parliament rejected a government-backed amendment to anti-graft legislation that would have given the Kenya Anti-Corruption Commission the power to investigate two serious scandals known as the "Goldenberg" and "Anglo Leasing" scams.

The scandals damaged Kenya's standing with Western donors, angered most of its 36 million population and undermined Kibaki's election pledge to catch the biggest thieves.

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