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International Monetary Fund (IMF) Managing Director Christine Lagarde makes remarks during the Plenary Session of the IMF and World Bank's 2017 Annual Fall Meetings, in Washington, U.S., October 13, 2017. REUTERS/Mike Theiler/File Photo

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By Pavel Polityuk and Alessandra Prentice

KIEV (Reuters) - Ukrainian lawmakers on Thursday shelved a draft law that critics say would have undermined the independence of anti-corruption institutions, which Ukraine's foreign backers this week said were under attack from vested interests.

Reformists welcomed the removal of the bill from parliament's agenda as a win at a time when Ukraine's Western-backed corruption fight faces pushback on several fronts.

But the victory was swiftly tempered by a separate vote later to dismiss the European Union-backed head of parliament's anti-graft committee Yegor Sobolev.

The International Monetary Fund and the World Bank earlier said the authorities must protect the anti-graft bureau known as NABU, following similar warnings from the United States and EU.

The criticism helped persuade MPs to drop the law, which would have given parliament the power to dismiss the heads of anti-corruption institutions, lawmaker Mustafa Nayyem said.

"They have retreated," he said in a post on Facebook.

"The clear heads of individual politicians, the reaction of the public, the media and personal contacts of many activists in international organisations played an important role in this story."

The United States, EU and Canada have thrown financial and diplomatic support behind the leadership that took power in Kiev after the 2014 Maidan protests ousted the Kremlin-backed President Viktor Yanukovich.

But perceived backsliding on reform commitments has delayed billions of dollars in IMF loans and tested the patience of Ukraine's allies even as Kiev pushes for closer EU integration and more foreign investment.

"We are deeply concerned by recent events in Ukraine that could roll back progress that has been made in setting up independent institutions to tackle high-level corruption," IMF chief Christine Lagarde said in a statement.

Later on Thursday parliament voted to dismiss Sobolev, a member of the opposition Samopomich faction, which helped the committee drive key reforms through parliament.

"The leaders of political forces no longer feel untouchable. They don't feel they are above the law. That is the reason for my dismissal," Sobolev said.

BACKERS' CONCERN

Ukraine's backers are concerned too about actions by prosecutors that they say threaten the independence of NABU, set up after the Maidan protests and which has been at loggerheads with other law enforcement bodies.

Lagarde called on Ukrainian authorities and parliament to safeguard the independence of NABU and repeated a call for the creation of an independent anti-corruption court.

Parliament's failure to pass legislation to set up such a court has delayed the disbursement of an IMF loan tranche under a $17.5 billion (£13.1 billion) aid-for-reforms programme.

President Petro Poroshenko urged parliament to speed up the process.

"If at the beginning of next week I don't see progress, I'll independently prepare and submit the relevant draft law," he said in a statement.

(Additional reporting by Natalia Zinets; Editing by Matthias Williams and Richard Balmforth)

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