Hungary's parliament has adopted a reform of the country's central bank that critics say increases the government's influence over monetary policy.

Ignoring international criticism of the measure, deputies approved by a vote of 293-4 the law which led the EU and IMF to walk out of talks earlier this month on a possible bail-out for Hungary.

Hungarian Prime Minister Viktor Orban earlier remained defiant about the measure.

"Nobody can interfere with Hungarian legislative work, there is no-one in the world who might tell the elected deputies of the Hungarian people which act to pass and which not to," Orban said on Hungarian public radio.

Orban's centre-right Fidesz party holds such an overwhelming majority in parliament that it can amend the country's constitution.

The head of the European Commission Jose Manuel Barroso has demanded Orban withdraw legislation that critics said would increase government influence over monetary policy.

US State Secretary Hillary Clinton has also repeatedly expressed her concern over the state of democracy in Hungary.

In a major U-turn, Orban turned to the IMF and EU for help in mid-November after Hungary had difficulties borrowing on the bond markets and its currency fell drastically against the euro.

The lenders however walked out on preliminary talks on December 16 over the draft law that would see the central bank disappear as a separate institution and more political appointees added to the committee that decides on monetary policy.