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* Moscow outraged by human rights bill
* Putin ally says Russia revising ties with U.S.
* Further setback to "reset" in relations (Adds lawmaker comments)
By Thomas Grove
MOSCOW, Jan 30 (Reuters) - Russia scrapped a law enforcement agreement with the United States on Wednesday, further turning back the clock on a "reset" in relations since President Vladimir Putin's return to the Kremlin last year.
An order to end the deal, signed by Prime Minister Dmitry Medvedev, was posted on the government's website. It said the agreement, under which Washington provides financial assistance for law enforcement and drugs control programmes, "does not address current realities and has exhausted its potential".
Lawmaker Alexei Pushkov, a Putin ally who heads the parliamentary committee on international affairs, welcomed the move.
"Russia is reformatting its relationship with the USA: this is already the third agreement cancelled in the last half-year. We are saying farewell to our dependence on 'Power No. 1'," he said on Twitter.
Since Putin's return to the Kremlin in May, his foreign policy rhetoric has become increasingly focused on external threats, including from the United States which Russia has accused of trying to meddle in Russian politics.
Moscow was infuriated by a U.S. human rights bill that barred Russians accused of human rights abuses from entering the United States and freezed any assets they have there.
It responded with a bill in December imposing similar measures and banned the adoption of Russian children by American families, clouding what was left of the "reset" in ties hailed by U.S. President Barack Obama at the start of his first term.
Moscow also outlawed U.S.-funded "non-profit organisations that engage in political activity" and last October ordered the U.S. Agency for International Development to cease operations in Russia, saying Washington was using the mission to interfere in politics.
The government statement on Wednesday said Russia's Foreign Ministry had been told to inform U.S. authorities about the withdrawal from the 11-year-old law enforcement agreement. The U.S. Embassy in Moscow declined immediate comment.
REDUCING U.S. INFLUENCE
Russia announced last October that it was withdrawing from a decades-old agreement under which Washington helped it dismantle nuclear and chemical weapons. Russia argued it now had the power and finances to carry out disarmament itself.
Dmitry Trenin, director at the Carnegie Moscow Center think tank, said Putin was playing on Russians' patriotism by portraying Washington as a meddling foreign power in an attempt to cast dissenters as traitors working for an outside threat.
"Mr. Putin's goal is to reduce as much as he can U.S. influence on Russia internally," he said.
"I'm sure there will be a lot of damage but they believe the pay-off will be bigger: whoever opposes the leadership here will be seen as a fifth column who is doing the bidding of the United States, unpatriotic at minimum and very likely a traitor."
Several members of a protest movement against Putin, which started after allegations of vote rigging after a 2011 parliamentary election, have been portrayed by the media as being on the payroll of foreign countries.
The United States withdrew from a bilateral civil society group earlier this month to protest against what it said was Moscow's clampdown on civil rights and public activism.
Russia's Foreign Minister Sergei Lavrov described the U.S. human rights bill, named after lawyer Sergei Magnitsky who died in detention in 2009, as "odious", but said Moscow wants constructive ties with the United States.
Trenin said that while Russia was likely to continue to reduce the United States' presence in the country, Moscow was unlikely to cut major initiatives. Russia allows the NATO-led International Security Assistance Force to use a rail route through its territory to transport equipment.
He added that some of recent deal-breaking with the United States was being driven by a desire to shed its image as an aid recipient. (Additional reporting by Gabriela Baczynska)