By Chris Morris BBC Brussels correspondent in Luxembourg

European Union foreign ministers have failed to agree on whether to apply sanctions against countries which refuse to co-operate with EU in its campaign against illegal immigration.

The issue will now be discussed by EU leaders at a summit in Seville later this week.

EU member states have been struggling to find the best balance between carrot and stick.

A majority of the EU foreign ministers meeting in Luxembourg supported a Spanish proposal that countries which failed to support efforts to limit illegal immigration could be punished with the suspension of aid agreements.

But France, Sweden and Luxembourg said that would be counter-productive.

UK Foreign Secretary Jack Straw (left) denies influence of far-right

They argue that development aid is the key, helping to persuade would-be migrants that staying in their home countries is a worthwhile option.

The EU has asked these countries to improve their border controls and to fight harder against organised smuggling gangs.

It's also demanding that countries of origins agree to take back their citizens if they're denied asylum in the EU.

The British Foreign Secretary, Jack Straw, said he wanted to focus on positive incentives, but he emphasised that the EU should seek to use all appropriate levers to ensure that other countries do their bit.

He also rejected accusations from human rights groups, such as Amnesty International, that the EU is pandering to the far-right in its new focus on immigration and asylum.

Europe's discussion of illegal immigration will now move on to the Seville summit at the end of this week where government leaders will continue the search for a clear common policy.