The Government signalled yesterday that it would delay publication of a controversial report outlining fundamental reforms for the electricity market for several months.

The delay comes as the European Commission warned states, including Ireland, that it would take legal action to open electricity and gas markets to competition.

The electricity report, which will be completed and sent to the Government next week by the international consultancy Deloitte, is expected to recommend major changes to ESB, including the possible sale of parts of the company.

Minister for Natural Resources, Noel Dempsey, had previously indicated that he would publish the report sometime this year. However, he said yesterday that he now favoured delaying publication until a separate Government review of the wider energy market in the Republic was complete.

"It makes sense not to publish a report into such a crucial part of the energy sector in isolation of the wider review which we are conducting," said Mr Dempsey, who was attending a council of ministers meeting in Brussels.

"For example, the electricity report will have repercussions for the rest of the energy sector, including renewable energy and security of supply. It will be completed and published in the first half of 2006," he said.

The electricity report is expected to be highly contentious with both unions and management at ESB opposing any sale or part sale of the ESB.

Meanwhile, in Brussels yesterday the energy commissioner, Andris Piebalgs, warned EU governments to implement laws aimed at opening electricity and gas markets to more competition or face legal action from the commission.

"The current state of play of the internal electricity and gas markets gives cause for concern. Rapid and significant improvements are necessary," said Mr Piebalgs.

"I can assure you that we will closely monitor the implementation of the directive and continue to insist on compliance, where necessary through infringement procedures."