* Berlusconi holds talks in Belarus in sign of EU thaw
* Lukashenko says visit a gesture of support
* Belarus bows to critical West, liberalises election laws
(Recasts with Berlusconi, Lukashenko quotes, details) By Andrei Makhovsky
MINSK, Nov 30 Italian Prime Minister Silvio Berlusconi broke the isolation of ex-Soviet Belarus from the West by making a one-day visit on Monday, hours after lawmakers eased restrictive electoral laws.
The visit, the first by a Western leader in more than a decade, ended with a private dinner with Belarussian President Alexander Lukashenko who visited Italy earlier this year.
Ties between ex-Soviet Belarus and Western countries turned frosty in the mid-1990s, when European and U.S. governments and rights groups made frequent criticisms of Minsk's approach to human rights and democratic standards.
"We consider your visit ... as an eloquent gesture in support of Belarus in the international arena," Lukashenko said.
"Italy for us is a privileged partner in Europe," he told a news briefing after talks with Berlusconi.
Berlusconi stopped short of mentioning Belarus's ties with the EU or human rights but still made a political quip.
"Thank you and thanks to your people who, I know, love you, as is demonstrated by the election results which everybody can see," Berlusconi told Lukashenko, in power since 1994 and once tagged "Europe's last dictator" by the George W. Bush administration.
The European Union accused Lukashenko of rigging his re-election in 2006 and imposed sanctions including a visa ban on dozens of top officials.
The EU suspended the visa ban a year ago to encourage reforms and extended the suspension for a year earlier this month. A freeze on Belarus government assets in the EU remains in place.
Officials also signed a memorandum of understanding between the Belarus government and Italian engineering group Finmeccanica SIFI.MI on cooperation in energy, transport and space matters. No details were made available.
Hours before Berlusconi arrived, Belarus's compliant parliament backed amendments aimed at liberalising the electoral law. The assembly voted by 104 to 0 at the first reading in favour of the changes, which were proposed by Lukashenko.
"We have given a maximum of attention to the proposals made by the European Union and the OSCE. In some cases, we have moved even further," Belarus's Central Election Commission Chairwoman Lidia Yermoshina told reporters after the vote.
The changes include a simplified procedure for registering candidates, and allows them to fund their own campaigns.
Under the new rules, representatives of political parties would make up one third of the members of local election commissions and would have wider control over vote counting.
Lukashenko's shift towards warmer relations with Europe is watched with unease in Russia, whose ties with its traditional ally have deteriorated in recent years as the rising prices for Russian energy have hampered the Belarussian economy.
Minsk has also avoided recognising Georgia's Russian-backed separatist regions of Abkhazia and South Ossetia as independent states, a move sought by Moscow, but opposed by the West. (Additional reporting by Valentina Rusconi; Writing by Dmitry Solovyov and Conor Sweeney; Editing by Robin Pomeroy) ((firstname.lastname@example.org; +7 495 775 1242))