Ireland would become a net contributor to the EU, paying half of 1 per cent of national income into the Union's budget, under a European Commission proposal for the funding of the EU between 2007 and 2013.

The Commission wants to increase the EU budget to almost €1,000 billion over the seven-year period to fund the integration of 10 new member-states.

The budget commissioner, Ms Michaele Schreyer, said that all member-states must take a fair share of the burden of financing an enlarged Union.

"The European Union has shared aims. It is a community of solidarity, there will therefore always be net beneficiaries and net contributors to the EU budget, who will vary depending on the evolving priorities of the EU," she said.

Ireland has been a net beneficiary since joining the EU in 1973, receiving considerably more from the EU budget than the State has contributed to it. However the economic success of recent years has made the country one of the wealthiest per capita in the Union.

The commission wants to phase out Britain's EU rebate over four years and to replace it with a refund for all countries that pay too much into the Union's budget.

Under the proposed new system, all countries that make net payments of more than 0.35 percent of national income to EU funds would get a refund of two-thirds of the excess, up to a total limit of €7.5 billion for all.

That would reduce by more than half the €4.6 billion Britain now gets back from the EU every year while Germany, the Netherlands and Sweden would receive refunds for the first time.

Ms Schreyer said that Britain's rebate, which was won by Mrs Margaret Thatcher in 1984, was no longer appropriate in view of British economic success.

British officials insisted, however, that the rebate was not negotiable and accused the Commission of seeking to divert attention from its proposal to increase the EU budget. The EU's biggest net contributors want to limit the budget to 1 per cent of the EU's gross national income (GNI) but the commission argues that such a cap would prevent the Union from achieving its aims.

The Dutch government, which holds the EU Presidency, gave a lukewarm welcome to the commission's proposals and hinted that it may come up with a revised plan of its own.

"The Netherlands wants to encourage a discussion on policy content," it said in a statement.