Hungary’s emergency law that enables the prime minister, Viktor Orbán, to rule by decree without time limits is incompatible with being in the EU, the European parliament’s liberal group said on Tuesday.

Passing measures ostensibly to tackle coronavirus, the Hungarian parliament on Monday voted to give Orbán the power to rule by decree with no clear end-date. The law also introduces jail terms for spreading disinformation about the virus, raising fears it could be used to neuter critics of the government’s approach.

Sophie in’t Veld, a Dutch liberal MEP, who chairs the European parliament’s rule of law group, said: “Viktor Orbán has completed his project of killing democracy and the rule of law in Hungary. Clearly, the actions of the Hungarian government are incompatible with EU membership.”

Dacian Çiolos, a former Romanian prime minister and EU commissioner who now leads the liberal group, said it was “shameful this dreadful corona is abused in such a manner”.

The European commission president, Ursula von der Leyen, issued a statement on Tuesday calling for all emergency measures to be “limited to what is necessary and strictly proportionate” and not lasting indefinitely. “It is of utmost importance that emergency measures are not at the expense of our fundamental principles and values as set out in the treaties,” Von der Leyen said in a statement that did not mention Hungary.

The message from Washington was more direct. Eliot L Engel, the chairman of the US House of Representatives’ foreign affairs committee, said Orbán was making “a blatant power grab in the face of the worst global health crisis in recent history. This legislation marginalises the Hungarian parliament and allows prime minister Orbán to rule by decree like a dictator.

“Such a serious affront to democracy anywhere is outrageous, and particularly within a Nato ally and EU member.”

Katalin Cseh, an Hungarian MEP for the centrist Momentum party, urged the commission to engage with Hungary over the law last week once it was clear Orbán was on course to secure the law with his two-thirds majority in the Hungarian parliament.

“In a democracy, we should never give anyone unlimited powers or unlimited time. It’s not a matter of whether I trust Orbán. It’s really about our basic perception of democracy … There should always be checks and balances. Such a law is against my perception of parliamentary democracy.”

Norbert Röttgen, the head of the German Bundestag’s foreign affairs committee and a candidate in the race to succeed Angela Merkel as chancellor, also condemned the law, writing on Twitter that it “effectively eliminates opposition” and was a breach of basic principles the EU “cannot accept”.

Others accused EU authorities and member states in the EU council of ministers of failing to speak out, following Hungary’s sharp decline in democratic freedoms over the last 10 years, as measured by international organisations, such as Freedom House and article 19. “The silence from the president of the commission and the council is deafening,” in’t Veld said.

Responding to Von der Leyen’s statement, Orbán’s spokesman Zoltán Kovács said the Hungarian state of emergency and extraordinary measures were “congruent with the treaties and the Hungarian constitution and targeted exclusively at fighting the coronavirus”.

He said the law upheld EU values, rule of law, press freedom, while accusing critics of being misinformed.