Labour claims independence would lose Wales' EU structural funding

Labour attacked Plaid Cymru's policy on independence, which it called a "separatist pipedream."

But Plaid Cymru said Labour's claim was "fantasy politics".

The row between the parties comes as the European election campaign enters its final week.

Labour said it had received confirmation in a letter from the European Commission that Objective One funding would cease if Wales became independent.

Labour said the commission had now confirmed, that if Wales became independent its Objective One money would stop immediately.

The party said the cash would stop before the end of the funding cycle, and there would be no transition money.

The �1.36bn is due to receive from 2000 to 2006 has helped create or safeguard 50,000 jobs so far, according to Labour.

'Fantasy politics'

It accused Plaid of a "separatist pipedream" putting thousands of jobs at risk.

But Plaid said accused Labour of an attempt to divert voters' attention away from the situation in Iraq.

A Plaid spokesperson said: "This is fantasy politics.

"It's based on a long series of hypotheticals which are about as likely as George Bush being greeted by millions of cheering Iraqis on the streets of Baghdad.

"It's an old story and another desperate attempt by New Labour to divert attention from their disastrous handling of the Iraq war and their crumbling support ahead of next week's election."

'Arcane argument'

The Welsh Conservatives said they did not want to be drawn into the row between Labour and Plaid.

A Conservative spokesman said: "We are concerned about the delivery of public services and economic performance, not an arcane argument about the constitution.

"We'll leave that to Plaid Cymru and Labour."

The Welsh Liberal Democrats said: "This irrelevant spat about a hypothetical future Wales is missing the real issue.

"What really matters is making sure that Wales gets the best possible deal in the next round of Objective One starting in 2007.

"The Labour assembly government is sitting on its hands when it should be standing up for Wales and making sure our communities get the funding they need."