The United States warned aid-reliant Tanzania on Thursday that further assistance, under a programme that rewards countries for good governance, depended on its success in fighting corruption.

Over the past six years, the east African nation has fallen 17 places to 119 in a global ranking of perceived official corruption compiled by the anti-graft organization, Transparency International.

Parliament voted last month to dismiss senior officials, including the attorney general, the energy minister and several other members of cabinet, after a report on corruption in the energy sector. The report - requested by opposition lawmakers - said senior government officials fraudulently authorised the transfer of at least $122 million of public funds to a private company.

Tanzania won a five-year package of grants in 2008 worth $698 million under the US government's Millennium Challenge Corporation (MCC) programme, but the award of a second round of grants would now depend on the government's anti-graft effort.

"Progress in combating corruption is essential to a new MCC compact," Mark Childress, US ambassador to Tanzania said in a statement.

The US embassy did not say how much the second round of MCC funding would be worth. The MCC board expressed "serious concerns about the fight to control corruption in Tanzania," citing the recent graft allegations in the country's energy sector.

The nation of 45 million has made big discoveries of natural gas in its offshore region, but the development of the country's energy sector has long been undermined by graft allegations.

International donors said in October they will only pay outstanding pledges worth close to $500 million to what is one of Africa's biggest per capita aid recipients if the findings of the report on graft were published and action taken on it.

President Jakaya Kikwete is next week expected to decide on whether to approve the dismissals ordered by parliament of the government officials implicated in graft claims, his office said.

-Reuters-