UPDATE 2-U.S. Treasury will sell more Citigroup shares

* U.S. Treasury to sell another 1.5 million Citi shares

* Says sale will end September 30

* Government owns 18 percent stake in Citigroup (Adds Citigroup comment, details on existing stake)

WASHINGTON, July 23 (Reuters) - The U.S. Treasury department said on Friday it will sell another 1.5 billion Citigroup Inc (C.N) common shares as it whittles down a 27 percent stake that it bought during the financial crisis.

The department said it sold 2.6 billion Citigroup shares in two previous sales and received about $10.5 billion. It owns 5.1 billion shares, or about 18 percent of the company, and intends to keep selling them "in an orderly fashion."

The government gave the bank $45 billion in bailout money in 2008 and 2009. Citi paid back $20 billion in preferred shares, and converted $25 billion to common stock last year. The shares the government got last year were priced at $3.25.

The department said Morgan Stanley will again act as its sales agent and will have authority to sell the additional 1.5 billion shares under certain undisclosed parameters.

The department said it would end the program on Sept. 30 because of a blackout period ahead of Citigroup's third-quarter earnings report.

Citigroup spokesman Jon Diat declined to comment on Friday. (Reporting by Glenn Somerville and Maria Aspan; Editing by Theodore d'Afflisio and Robert MacMillan)