BOGOTA (Reuters) - The U.S. Congress should pass the Colombian free trade agreement to help the Andean country reform and strengthen its economy and improve its democratic institutions, the World Bank said on Thursday.

U.S. Congressional Democrats have blocked passage of the pact, saying that conservative President Alvaro Uribe has not done enough to crack down on right-wing militias that have killed hundreds of labor union members in the name of combating Marxist rebels.

"It's an agreement that would benefit both Colombia and the United States," said World Bank President Robert Zoellick, who started negotiating the Colombian trade deal in 2004 when he was U.S. Trade Representative.

"It is important beyond trade because it is part of a series of reforms that support the overall agenda of Colombia, whether it be security, human rights issues and anti-narcotics efforts," he said during a trip to Bogota. "It is part of a package supporting the success of Colombia."

The country's economy has picked up under Uribe, a hard-liner on security and the White House's strongest ally in South America. Colombia has received about $5.5 billion in mostly military aid from the United States since 2000.

But the country remains the world's biggest cocaine exporter and is mired in a four-decade-old guerrilla war with a mosaic of illegal groups battling for control of lucrative drug smuggling routes.

(Reporting by Monica Garcia; Writing by Hugh Bronstein; Editing by Eric Walsh)