The US House of Representatives has set itself at loggerheads with the Bush administration by backing a bill that would force Ethiopia, a US military ally, to improve its record on democracy and human rights or risk losing substantial aid.

The bill, passed on Tuesday, underscores unease among lawmakers over the US’s close ties with Ethiopia, which have grown since a violent crackdown on opposition supporters followed a disputed election in 2005.

But the Bush administration is unhappy about the bill, which it sees as an encroachment on the administration’s powers and misguided in some of its policies, and the legislation’s fate in the US Senate – which would also need to give its approval – is uncertain.

At the end of last year, the US gave implicit backing to Ethiopia’s invasion of Somalia, which Washington feared had become a haven for Islamist militants.

In testimony this week to the House subcommittee on Africa, Jendayi Frazer, the state department’s top official on African affairs, hailed what she called “unprecedented” agreements between the Ethiopian opposition and government, which she said were “a monumental advancement in the political environment”.

Examples she gave included reform of the National Electoral Board and a new code of conduct for the press. But she added that the US had raised “strong concerns” about human rights violations in the Ogaden region.

Known as the Ethiopia Democracy and Accountability Act, the bill would ban “non essential US assistance” if Ethiopia obstructed US efforts to further human rights, democracy, independence of the judiciary and freedom of the press. It would restrict security assistance and impose travel restrictions on Ethiopian officials accused of human rights violations unless Ethiopia met the conditions – although the legislation would give the president a waiver to prevent such measures from taking force.

The US will provide around $300m of aid to Ethiopia this year but it is unclear how much would be affected by the bill, which also exempts humanitarian, healthcare and emergency food assistance.

The text also exempts counter-terrorism, peacekeeping operations and international military training from any funding restrictions, a reflection of Ethiopia’s military capabilities and its perceived role as a source of stability in the volatile Horn of Africa.

Samuel Assefa, Ethiopia’s ambassador to the US, described the bill as “unconscionable and irresponsible”.