By Nelson Renteria

SAN SALVADOR (Reuters) -El Salvador's president signed into law an electoral reform on Wednesday that reduces the size of Congress by nearly a third, a move the ruling party says will reduce spending and critics say consolidates power ahead of elections.

The reform, announced last week by President Nayib Bukele in an address marking four years in government, cuts the unicameral Congress' size from 84 lawmakers to 60.

Congress approved the law in the early hours of Wednesday.

Bukele also proposed a reform to consolidate the country's 262 municipalities into 44 districts.

Opposition parties say they will reduce smaller parties' political participation to a minimum.

"This decision has an electoral interest, which is precisely to continue concentrating power, concentrating resources," lawmaker Anabel Belloso of leftist party FMLN said.

Presidential and legislative elections will be held in February, with municipal and regional Central American Parliament elections scheduled for March.

Bukele is highly favored for re-election, despite the constitution appearing to clearly prohibit consecutive terms.

In 2021, El Salvador's top court, whose members are appointed by Congress which is controlled by the president's party, ruled that Bukele could stand for re-election, a decision that drew international condemnation.

The reform proposals are part of a larger "war on corruption" announced by the president.

Bukele said last week he would also build a prison for white-collar criminals, similar to the "mega prison" opened earlier this year for gang members.

He launched a harsh crackdown on gangs last year, suspending some constitutional rights as part of a so-called state of exception.

That move garnered widespread support among Salvadorans, though human rights groups say innocent people have been caught in the dragnet.

(Reporting by Nelson Renteria; Writing by Kylie Madry and Brendan O'Boyle; Editing by Bill Berkrot and Edwina Gibbs)