Georgia has been warned by the US not to become an adversary of the west by falling back in line with Moscow, as its parliament defied mass street protests to pass a “Kremlin-inspired” law. Washington’s assistant secretary of state, Jim O’Brien, spoke of his fears that the passing by Georgia’s parliament of a “foreign agents” bill on Tuesday could be yet another “turning point” in the former Soviet state’s troubled history. In comments that appeared to signal a conviction in the US that the Georgian government was once again aligning with Russia, O’Brien suggested funding could soon be pulled. Billions of dollars had been spent by the US on rebuilding Georgia after the fall of the Soviet Union and hundreds of millions more were planned for the country’s economy and military, he said. “All that has to be under review if we are now regarded as an adversary and not a partner,” O’Brien told reporters at a press conference in Tbilisi. The US official was speaking as a controversial “foreign agents” bill was backed by 84 MPs to 30 in defiance of demonstrations that have brought hundreds of thousands on to the streets of Tbilisi. Outside the parliament building, masked riot police used teargas in a vain attempt to disperse one of the largest protests seen so far while inside MPs brawled over the country’s future. Peaceful protests carried on after nightfall, with throngs of demonstrators marching to Heroes Square, about 2km from parliament, and blocked off the surrounding streets. Under the legislation, media or civil society groups in Georgia that receive more than 20% of their funding from abroad will have to register as “organisations serving the interests of a foreign power”. The US state department has called the bill “Kremlin-inspired”, as it has echoes of legislation introduced into the Russian statute books in 2012 by Vladimir Putin, which many people say has been used to silence critics. O’Brien said the strategic relationship with Georgia had been put at risk by the new law and a ramping up of anti-western rhetoric in recent days. Georgia’s prime minister, Irakli Kobakhidze, claimed on Monday that the country was being victimised by a US-led “global party of war”, in language that had echoes that of that used by the Kremlin over the west’s aid to Ukraine. O’Brien described the comments as “unreal and a complete misunderstanding of the international community’s relationship with Georgia”. He said: “If the law goes forward without conforming to EU norms and [with] this kind of rhetoric and aspersion against the US and others, I think the relationship is at risk.” He also criticised the billionaire oligarch Bidzina Ivanishvili, honorary chair of the ruling Georgian Dream party, who is widely thought to drive government policy. O’Brien had asked for a meeting with Ivanishvili but it had been rejected on the grounds that the US had frozen $2bn (£1.6bn) of his money through “de facto” sanctions, Kobakhidze had told reporters on Monday. O’Brien said there were no sanctions on Ivanishvili “at this point” and that “for such an individual to be so badly misinformed is shocking and disappointing”. He went on to claim that the comments suggested that the prime minister had put the “individual interests” of one billionaire over Georgia’s constitutional commitment to a close working relationship with Nato, the western military alliance. He also called for the Georgian police to respect the peaceful protests that have filled the streets of Tbilisi and called for those found to have used excessive force to be arrested and prosecuted. A series of leaders of the opposition have been badly beaten on the streets by unidentified gangs while footage has been captured of protesters being punched and kicked by police. O’Brien warned that the US was prepared to sanction Georgian government ministers and officials over the developing crisis. He said: “If the law advances against EU norms and there is an erosion of democracy and violence against peaceful demonstrators, we will see restrictions from the United States. There will be financial and/or travel restrictions specifically on those responsible and their families.” After a fresh outbreak of police violence on Tuesday, a number of protesters were treated by medics after teargas was used on a noisy but seemingly peaceful crowd while squads of police dragged individuals away. The violence spread into the chamber, with a dozen MPs fighting and one MP, from the governing Georgian Dream party, being held back by security guards as he violently lurched at the chair of the main opposition, Levan Khabeishvili. The police were initially successful in clearing the crowds from Rustaveli Avenue in front of the imposing parliament building but the officers soon retreated to whistles and jeers as the demonstration grew in the early evening. A rendition of the national anthem, Tavisupleba, or Freedom, was sung by the many tens of thousands braving the rain followed by the playing on a tannoy of Beethoven’s Ode to Joy, also known as the anthem of Europe. Lithuania’s president, Gitanas Nausėda, issued a statement of solidarity as images of the unrest spread around the world. “Dear Georgian people, we hear you and stand with you in your struggle for the European future of Georgia. Nobody has the right to take your European dream away. Nobody has the right to silence the will of the people to live by values,” Nausėda’s statement said. Georgian Dream is accused of unwinding the progress made since the 2003 rose revolution, when a non-violent movement brought an end to an administration that was Soviet in style and corrupt in practice. The party was elected 12 years ago after those who drove the changes in Georgian politics in the early 2000s were blamed for antagonising Russia, leading to an invasion and full-scale war in 2008. The European Commission on Tuesday restated its position that the new law would undermine Georgia’s application to join the European Union. “EU member countries are very clear that if this law is adopted it will be a serious obstacle for Georgia in its European perspective,” it said. On Monday, students from 30 Georgian universities joined the protests and went on strike, backed by lecturers. Irakli Beradze, 22, a student in Tbilisi, holding up a sign saying “Russia can’t gaslight us, we have gas masks”, said that he and thousands of others “would not let Russia have our country”. Tina Bokuchava, parliamentary leader of the opposition United National Movement, said: “Today’s vote will focus minds on the urgent need for regime change in Georgia. With elections to look forward to in October, I am confident that the unity seen on our streets in recent weeks will prove a watershed moment in our nation’s history. “Our rightful place is in Europe – but the Ivanishvili stranglehold must be broken first if this dream is to be realised.”