* Crowd celebrates release of opposition politician
* Tension rising in run-up to Dec. 1 parliamentary election
KUWAIT, Nov 1 (Reuters) - Kuwaiti authorities freed a prominent opposition politician on bail on Thursday after charging him with insulting the ruling emir, accusations which his lawyer said were fabricated.
Musallam al-Barrak, an outspoken former member of parliament, was picked up from his home on Monday night, two weeks after a protest rally where he appealed to the emir, Sheikh Sabah al-Ahmad al-Sabah, to avoid "autocratic rule".
Although OPEC member and U.S. ally Kuwait has avoided the kind of mass pro-democracy unrest seen in other Arab countries, tensions have mounted between the elected parliament and the government, dominated by the Al-Sabah family, ahead of a December election.
Police in the oil-producing Gulf state used tear gas and smoke bombs on Wednesday to disperse protesters marching on a prison where Barrak was being held, witnesses said.
Barrak's lawyer Mohammed Abdulqader al-Jassem said the politician was released on bail of 10,000 dinars ($35,545), adding the charges against him were fabricated and his comments had been twisted.
Around 200 of Barrak's supporters gathered outside the central prison on the outskirts of Kuwait City to welcome his release. The jovial crowd lifted him on their shoulders and chanted "The people want Musallam al-Barrak".
"I trust the emir... but maybe he has received bad information from those around him," Barrak told the crowd.
Although Kuwait allows more freedom of speech than some other Gulf states, the emir, who has the last say in state affairs, is considered "immune and inviolable" in the constitution.
Demonstrations about local issues often occur, but violence has been rare.
On Oct. 22 police used tear gas and baton charges to break up another demonstration, witnesses said.
On Wednesday, the Interior Ministry said security forces had scattered rioters who had blocked streets and assaulted police with stones and bottles, according to a statement published by the state news agency KUNA.
It said drivers had tried to run over members of the special forces, injuring five in two separate incidents. The ministry said some arrests were made.
On Thursday, the ministry said it would "deal firmly" with any gathering that violated the law, KUNA said. The government has banned unregistered gatherings of more than 20 people on roads or in other public locations.
The opposition plans a protest rally on Nov. 4 over changes to the election law which some have criticised as an attempt to give pro-government candidates an advantage in the parliamentary election on Dec. 1. The government says the amendments were needed to preserve national unity.
The opposition politicians have said they will boycott the vote, the second this year, which was ordered by the emir after months of political deadlock. An opposition bloc, made up of Islamists, liberal and tribal lawmakers, won a majority at the last elections in February.