(Updates with background, quotes)

By Aaron Maasho

ADDIS ABABA Dec 1 (Reuters) - An Ethiopian opposition leader from a region hit by deadly anti-government protests has been arrested after returning from meeting members of the European Parliament in Brussels, a political ally said on Thursday.

Merera Gudina leads the Oromo People's Congress from Ethiopia's Oromiya region, which has been the centre of protests against land grabs and what opponents say is a government clampdown on political freedoms. Officials deny such charges.

"Merera arrived in Addis Ababa on Wednesday morning from a trip to Brussels, where he met members of the European Parliament," Gebru Gebremariam, deputy chairman of the Oromo Federalist Congress, told Reuters.

"Police arrested him in his house the same day in the evening. We haven't been given reasons behind his arrest," Gebru added.

A government secretariat, chaired by the prime minister and in charge of implementing emergency rule, said Merera violated guidelines "by making contact with terrorist groups".

"Given this violation, Merera is in custody and an investigation is currently taking place," the Amharic-language statement said.

More than 500 people have been killed since last year in protests that subsided after the government declared a six-month state of emergency in October.

The demonstrations were initially triggered by anger over a development scheme for the capital that demonstrators said would force farmers off their land, but then broadened into demonstrations against political restrictions.

Businesses in Oromiya and other areas, many of them foreign-owned, were attacked. Foreign firms have often been leased land by the government that locals say was seized from them for little compensation and sold on at great profit.

Ethiopia's government, which scrapped the capital's development plan after protests erupted, denies imposing political restrictions or illegally taking land.

Opposition parties failed to secure a single seat in parliament in the last elections in 2015. (Reporting by Aaron Maasho; Writing by Katharine Houreld; Editing by Edmund Blair and Andrew Heavens)