The European Commission yesterday unveiled its long-awaited plan to fund the European Union's eastern enlargement.

The EU's executive body put the cost of admitting 10 new members, mostly from impoverished ex- communist central Europe, at €40.2 billion (£31.65 billion) over the 2004-06 period, with the bulk of the money going to farmers and regional infrastructure projects.

But the candidates reacted angrily to news that the plan envisages only a gradual phasing-in of direct payments to their farmers, starting in 2004 - with just 25 per cent of the aid dished out to current member-states.

"This is a serious, honest and realistic proposal that looks to the future," Commission President Mr Romano Prodi told a news conference, adding that the overall sum amounted to 4 per cent of the combined gross domestic product of the 10 applicants.

"That is a very considerable sum," Mr Prodi said.

Anticipating complaints from both candidates and member-states, EU enlargement commissioner Mr Günter Verheugen said: "This offer strikes the right balance between the expectations of the candidate countries, who will become full members of the European Union, and the budgetary limits of the EU.

"In other words, this represents the best possible deal, and not an invitation for haggling," Mr Verheugen added, in a clear warning to member-states not to drag out the discussions.

EU officials expect a difficult battle among member-states over exactly how much money the newcomers should get, not least because France and Germany both face elections this year and have little room for manoeuvre.

The EU hopes to wrap up negotiations with 10 countries by the end of 2002, paving the way for their accession by 2004.