The Government will persist with its regionalisation proposals, the Taoiseach said. "These areas have no possibility of achieving more than maybe 65 per cent of the EU average wealth after 2007. We should protect that and fight for the west and the Border regions to maintain these areas in Objective 1 status," Mr Ahern added.

Asked by the Labour leader, Mr Ruairi Quinn, why the Government's proposals had been turned down by Eurostat, the Taoiseach replied: "Eurostat is still involved in the negotiations, but they are negative."

Pressed further by Mr Quinn, he said that the negotiations were ongoing. "Are we in an appeal position?" Mr Quinn asked. "That is not the status," Mr Ahern replied.

The Fine Gael leader, Mr John Bruton, observed: "They have the white flag up, but it is at half-mast." Mr Ahern said that there was ongoing contact between the Central Statistics Office (CSO) and Eurostat.

"I still contend, and I think everybody in this House should do so, that areas in this country which have half the average EU wealth should be entitled to stay under Objective 1. I think some members of this House seem to believe that we should not have anybody anywhere in this country under Objective 1 status.

"What the Commission would like to do is to make sure nowhere in this country, or anywhere else for that matter, with the exception of Devon and Cornwall, are allowed stay in Objective 1 after the next round. We are totally opposed to that view."

Mr Bruton said the problem over Objective 1 status was typical of the problems facing the Government in its dealings with the EU generally, in the sense that the Government was trying to please everybody.

"It is not prioritising and is finding itself ultimately displeasing everybody because of that fact," he said.

Mr Quinn asked if the Taoiseach thought that the various positions the Government had adopted had undermined its negotiating position.

Mr Ahern said that the Government's position had been well focused on Objective 1 status. "The west and the Border regions, based on CSO figures, should have Objective 1 status.

"That has been coherently put to the Commission, and we should maintain and fight for that position. Otherwise, we will get nowhere."

Asked by Mr Quinn if the Government would publish the letter sent from Brussels, Mr Ahern said it was not the practice to publish letters which were passed between European agencies.

From what he had heard, the text of the letter had been obtained by journalists in Brussels.