(Adds details on Hasina arrival)

By Serajul Islam Quadir

DHAKA, May 6 (Reuters) - A group of European Union lawmakers has praised the efforts of Bangladesh's army-backed interim government to fight widespread corruption, but said it must lift the emergency imposed in January and hold national elections.

"We appreciate the initiatives taken by the caretaker government of Bangladesh to fight corruption, restore the order and reform the institutions, including political parties," the lawmakers said in a statement.

But the government must withdraw the emergency -- imposed in the wake of widespread political violence -- as soon as possible and arrange to hold parliamentary elections, the lawmakers said.

"For the sake of democracy, we urge the caretaker government of Bangladesh to urgently lift the state of emergency, which ... according to the Constitution, can run for a maximum of three months," the statement signed by 14 lawmakers said.

The EU lawmakers' call came as former prime minister Sheikh Hasina prepared to fly from London to face charges of murder and extortion after the interim administration lifted a ban on her homecoming last month.

"She is coming back on Monday and we are ready to receive her," said Abdul Jalil, general secretary of Hasina's Awami League, said.

There were no plans to hold a public reception because of restrictions on rallies and gatherings, party leader Asaduzzaman Noor said.

Hasina, who has been in London since April 19 when she stopped off after a holiday in the United States, has said she was prepared to go to jail on her return.

She denied charges of extortion and abetment to murder relating to street violence in Dhaka last October.

Bangladesh has been under a state of emergency since Jan. 11 and parliamentary elections planned for Jan. 22 were cancelled by the interim government headed by former central bank governor Fakhruddin Ahmed.

All political activities are banned and security forces have detained more than 160 senior political figures in the anti-graft hunt, including Tareque Rahman, elder son of the most recent prime minister Begum Khaleda Zia.

Fakhruddin has said he hopes to be able to hold a free and credible election before the end of next year.

The EU deputies also said the government must ensure respect of human rights by security forces and to use force only when necessary.

The government's law and information adviser Mainul Husein refused to comment on the EU statement but said Dhaka will follow it own counsel.

"We do not want to be dictated by any foreign bodies and so will make no comment," he told Reuters.

Bangladeshis have generally supported the crackdown on politicians and officials and political commentators on Sunday urged the government to pursue the campaign to the end.

"It is not time to lift the emergency," said Syed Mohammad Ibrahim, a retired army major-general.

"The achievements of the present government are praiseworthy. They have set in motion a process of reformation or purification in social, economical and political fields which will take time to mature." he said.

(Additional reporting by Azad Majumder)

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