UPDATE 1-Australian Senate passes Telstra split laws

* Australia's Telstra to split retail/wholesale arms

* Laws underpin $35 bln national broadband plan

* Lower house of parliament to rubber stamp on Monday (Adds quotes)

CANBERRA, Nov 26 (Reuters) - Australia's Senate passed laws on Friday to force dominant phone company Telstra Corp. (TLS.AX) to structurally separate, underpinning the government's plans for a $35.7 ($35 billion) billion National Broadband Network.

The laws effectively force Telstra to split its wholesale arm from its retail arm, paving the way for the government to finalise an A$11 billion deal with Telstra for the use of its fixed-line assets for a new national broadband network.

The laws will be formally rubber stamped by parliament's lower house on Monday, before a competition ruling due at the end of November on how internet retailers can plug into the new government-owned wholesale internet monopoly.

"The interest of consumers, also small businesses and the economy, will benefit enormously from the reforms we are voting on today," Communications Minister Stephen Conroy said in closing the marathon debate in the Senate.

"The proposed reforms establish a framework for Telstra to progress its decision to structurally separate, including providing it with greater clarity around the undertaking process which will allow Telstra to seek approval from its shareholders on a firm proposal to migrate its fixed line customers to the NBN."

The NBN was one of the election clinchers for the Labor party earlier this year as Australia's slow and expensive Internet service has often frustrated voters.

The government stepped in to back the network as the country's vast distances and rugged terrain kept private providers away.

Telstra shareholders will be asked to endorse the structural separation in 2011.

($1=A$1.02)

(Reporting by James Grubel; Editing by Michael Perry)