BRUSSELS, Oct 29 (Reuters) - The European Union executive welcomed on Monday an agreement by Bosnia's Muslim, Croat and Serb political leaders to get stalled police reform back on track, a key condition for closer ties with the bloc.

A spokeswoman for EU Enlargement Commissioner Olli Rehn said the European Commission had not yet had time to study Sunday's declaration in Mostar in detail. However, she added:

"The Commission welcomes the spirit of consensus and compromise that was shown by the party leaders in Mostar.

"A strong political consensus is essential to meet the conditions for closer EU integration," said the spokeswoman, Krisztina Nagy.

The European Commission is due to issue its annual report on Bosnia's progress towards the bloc on Nov. 6.

Nagy declined comment on the broader political crisis in Bosnia, including threats by Bosnian Serbs of secession if the Serbian province of Kosovo wins independence, except to say: "We are obviously following all events ... very closely."

Local politicians said on Sunday they had signed a declaration respecting EU requirements that police in Bosnia -- now consisting of two separate forces -- be organised at state level, financed by a single budget and free from political bias.

This followed several failed attempts over the past three years to clinch the reform deal.

The European Union has warned Bosnia it could not sign a Stabilisation and Association Agreement, the first step on the ladder to EU membership, without the police reform.

Under the Dayton accords that ended its 1992-95 war, Bosnia consists of a Muslim-Croat federation and a Serb Republic, each with their own police force. Bosnian Muslims want a unified force, while Bosnian Serbs have pushed to keep their own.

Bosnia's international peace envoy Miroslav Lajcak called Sunday's agreement "a positive impulse" from political leaders towards bringing the country closer to Europe.

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