These proposals will lead Europe in the wrong direction

Shadow foreign secretary Francis Maude

The chancellor's Social Democratic Party suggests turning the European Commission in Brussels into a government - and for the European Parliament to be given control of the EU budget.

UK Prime Minister Tony Blair's official spokesman said on Monday that there would be a "big debate" on reforming the EU before six more countries join the union,probably in 2005.

It comes after the Conservatives denounced the ideas as "damaging" and the Liberal Democrats claimed it went "too far".

Social Democrats

Mr Schroeder's ideas are set out in a draft policy document for a meeting of Germany's governing Social SDP.

It proposes giving the European Parliament full power over the 15-nation group's budget, nearly half of which goes for farm subsidies.

And it calls for the creation of a second chamber of the European parliament - to bring together national government ministers.

'Out of step'

Shadow foreign secretary Francis Maude said the plan would "damage our economy and our democracy".

He said: "These proposals will lead Europe in the wrong direction.

"Chancellor Schroeder and his allies in Britain and elsewhere are badly out of step."

Mr Maude challenged the Prime Minister to "come clean" about his intentions over Europe.

Chancellor Schroeder's proposals are a government too far

Menzies Campbell, Liberal Democrat

"We strongly disagree with Chancellor Gerhard Schroeder, but at least he has the courage of his convictions," the Tory MP said.

Mainstream

"Tony Blair doesn't want to talk about his vision of the EU because he knows how out of touch Labour is on Europe with the mainstream majority of the British people.

"Tony Blair is happy for Britain to become even more run by the EU than it is now.

"Conservatives believe Britain should be in Europe, but not run by an EU government."

Blair and Schroeder: divided over integration

A Downing Street spokesman said on Monday: "The prime minister's view is a second chamber should be made up of national parliamentarians.

"There will be a big debate in run up to next inter-governmental conference on the institutional changes needed for enlargement."

Reform

Liberal Democrat foreign affairs spokesman Menzies Campbell warned: "Chancellor Schroeder's proposals are a government too far.

"It would make much more sense for reform of the existing institutions to be Chancellor Schroeder's priority before he embarks on proposals of this kind."

He said: "There is nothing like a majority for a "European government" nor would it be in the best interests of the people of the UK for there to be one.

"An effective EU, based on close co-operation between nation states in a treaty framework, will best command public confidence and electoral support."