KIEV, May 19 - Ukraine passed a law on Tuesday that gives the government the right to halt payments to creditors as it wrangles over the terms for restructuring $23 billion of foreign debt, Reuters reported.

Ukraine is holding talks to restructure sovereign and state-guaranteed debt to plug a $15 billion funding gap, but negotiations have soured in the past week, as bondholders repeated objections to any write-down on the principal owed and Kiev said that stance showed a lack of good faith.

Creditors need to "help us not with words, but with dollars, or rather with billions of dollars," Prime Minister Arseniy Yatseniuk said before parliament voted on the law.

The law, which the government says will allow Ukraine to penalize "unscrupulous" external creditors by holding back debt payments "if necessary", was passed by 256 votes, 30 more than the minimum required.

The restructuring deal put forward by Kiev foresees extending the maturity of the bonds and reducing the coupon and the principal. But only on Monday bondholders repeated their view that a so-called 'haircut' is not necessary.

"We want to pay, but pay under the terms proposed by the Ukrainian government," Yatseniuk said.

A spokesman for the creditor committee declined to comment on the new law.

Within minutes of the parliament vote, Ukraine's finance ministry suggested it would act in line with the new legislation and suspend debt repayments "unless a good faith collaborative" solution could be found.

"In order to defend the interests of the Ukrainian people, the government may have to suspend payments of state and state guaranteed debt to international commercial creditors," it said in a statement.

However, it said it was hopeful a solution could be found and restructuring terms agreed "rapidly" with creditors.

Ukraine's position was bolstered by comments from U.S. Treasury Secretary Jack Lew, who said holders of Ukraine's debt may need to make sacrifices.

The debt of state-owned Ukreximbank, Oschadbank and Ukraine railways, which is also being restructured, will not be subject to the new law, the government said.

"This (the law) weakens creditors' hands a bit as Ukraine are essentially telling them: don't expect to receive the next payments," said Gabriel Sterne, head of global macro at Oxford Economics.

On Monday, the bondholder group, which represents in excess of $10 billion of Ukrainian debt and is led by Franklin Templeton, disclosed the identity of other members of the committee, appearing to respond to accusations they lacked transparency in talks.

Russia, which holds a $3 billion Eurobond maturing in December, has declined to participate in the restructuring talks and has said it will turn to arbitration courts should Ukraine fail to meet its debt obligations on time. (rt/ez)