(Adds dropped word "after" in paragraph 1)
By Prak Chan Thul
PHNOM PENH, Nov 21 (Reuters) - Sweden said on Tuesday it was stopping new aid for Cambodia, except in education and research, and would no longer support a reform programme after the main opposition party was outlawed by the Supreme Court at the government's request.
The announcement marked the first concrete action by a European Union country in protest at a political crackdown in which veteran Prime Minister Hun Sen's main rival has also been arrested and civil rights groups and independent media attacked.
The United States cut election funding and said it would take more punitive steps after last week's ban on the Cambodia National Rescue Party (CNRP). The European Union has also threatened action.
Sweden's embassy in Phnom Penh said the country was reviewing its engagement with Cambodia.
"We will not initiate any new government-to-government development cooperation agreements, except in the areas of education and research," it said in a statement.
As a consequence, it would be unable to support decentralisation reform in its current form.
That reform aims to strengthen lower levels of government, such as local communes. The CNRP won control of more than 40 percent of the communes in elections in June, but has now had to give them up to the ruling Cambodian People's Party (CPP).
The CNRP was banned after its leader, Kem Sokha, was arrested for alleged treason. The government says he sought to take power with American help. He rejects that allegation as politically motivated, to allow Hun Sen to extend his more than three decades in power in next year's general election.
Responding to the Swedish statement, a senior official said Cambodia welcomed friendship with Sweden or other countries, but said they must understand the CNRP had been banned because the courts found it had committed treason.
"People should respect the Cambodian people's decision in accordance with the principle of democracy and the rule of law," said Huy Vannak, undersecretary of state at the Interior Ministry.
Sweden, which has given Cambodia an estimated $100 million in aid over five years, ranked third among individual EU member states in Cambodia's database of donors last year, after France and Germany.
Swedish fashion group H&M is also a key buyer from Cambodia's garment factories - the country's main export earner.
But Western donors have less sway than they once did since China has emerged as Cambodia's biggest aid donor and investor.
Meeting on Monday on the sidelines of a meeting of Asia-Europe foreign ministers in Myanmar, Chinese Foreign Minister Wang Yi told his Cambodian counterpart Prak Sokhon that China supported the government's actions.
China has repeatedly expressed its support for Cambodia, making no criticism of the government led by Hun Sen, a former Khmer Rouge commander, who is one of Beijing's most important allies in Southeast Asia.
(Additional reporting by Ben Blanchard in BEIJING; Writing by Matthew Tostevin; Editing by Clarence Fernandez)
Our Standards: The Thomson Reuters Trust Principles.