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By Alessandra Prentice

KIEV (Reuters) - Ukraine's neighbours have a right to criticise a new Ukrainian law banning schools from teaching in minority languages beyond primary school level, a leading European rights watchdog said on Friday.

Ukraine has sizeable Russian, Hungarian and Romanian minorities but passed the school-language legislation on Sept. 5, angering Hungary in particular, which threatened to retaliate by blocking Kiev's hopes of EU integration.

Kiev has submitted the law for review by the Venice Commission, a body which rules on rights and democracy disputes in Europe and whose decisions member states, which include Ukraine, commit to respecting.

In an opinion adopted formally on Friday, the commission said it was legitimate for Ukraine to address inequalities by helping citizens gain fluency in the state language, Ukrainian.

"However, the strong domestic and international criticism drawn especially by the provisions reducing the scope of education in minority languages seems justified," it said in a statement.

It said the ambiguous wording of parts of the 'Article 7' legislation raised questions about how the shift to all-Ukrainian secondary education would be implemented while safeguarding the rights of ethnic minorities.

As of 2015, Ukraine had 621 schools that taught in Russian, 78 in Romanian, 68 in Hungarian and five in Polish, according to education ministry data.

The commission said a provision in the new law to allow some subjects to be taught in official EU languages, such as Hungarian, Romanian and Polish, appeared to discriminate against speakers of Russian, the most widely used non-state language.

"The less favourable treatment of these (non-EU) languages is difficult to justify and therefore raises issues of discrimination," it said.

Language is a sensitive issue in Ukraine.

After the pro-European Maidan uprising in 2014, the decision to scrap a law allowing some regions to use Russian as an official second language fuelled anti-Ukrainian unrest in the east that escalated into a Russia-backed separatist insurgency.

The latest education bill has damaged Ukraine's ties with its Western neighbours however.

In October, Hungarian Foreign Minister Peter Szijjarto said the issue had driven relations to their lowest since Ukraine won independence following the Soviet Union's break-up in 1991.

Ukraine said it was willing to discuss minorities' concerns and will bear the commission's opinion and recommendations in mind when fine-tuning the law.

In a statement released while the commission was still in session, the education ministry said the watchdog's position was "balanced and constructive."

"Together with national communities, the ministry will work on further developing various approaches on education of minorities, taking into account their educational needs," the statement said. "The main goal is to provide a sufficient level of fluency in both the state and native languages."

(Additional reporting by Natalia Zinets; Editing by Matthias Williams)

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