WARSAW (Reuters) - Poland has suspended a ban on use of lignite for heating homes until April of next year to ease the supply crisis that has plagued the European Union's biggest coal producer.

Lignite, the more polluting type of coal, is used to generate electricity but has been banned in home furnaces in Poland for several years to improve air quality.

In response to Russia's invasion of Ukraine, Poland in April introduced an immediate ban on Russian coal used by millions of households and heating plants in smaller towns.

The embargo eliminated some 8 million tons of coal from the local market, causing a spike in prices and shortages of the fuel.

Poland is heavily dependent on coal, with around 80% of its power production provided by coal-fired plants. In past years, the country has had the European Union's highest ratio of premature deaths due to air pollution.

A bill passed in parliament on Thursday also suspends fines for burning lignite, a measure that was intended to fight smog. In June, rules banning the worst-quality coal were suspended.

In separate legislation, parliament on Thursday canceled the obligation of utilities to sell power on the commodities exchange. The energy regulator has criticized Thursday's decision while the government says it will lower electricity prices.

(Reporting by Marek Strzelecki in Warsaw; Editing by Matthew Lewis)