BRUSSELS has made a promise it may not be able to keep in pledging £575m of European aid to two areas of the North-East, the Government has claimed.

Ministers turned up the heat on the European Commission in the row over the extension of Objective One funding.

Durham and Tees Valley are in line for the aid because Growth Domestic Product (GDP) per head has slipped to only 75 per cent of the average of the original 15 EU members.

The package could be worth £575m over the seven years, between 2007 and 2013, and would be used to boost jobs by attracting investment to struggling areas.

But the package can only be afforded if the Brussels budget grows to 1.11 per cent of EU income, which would force the member states to hand over extra cash.

Britain, France, Germany, the Netherlands, Austria and Sweden - the biggest contributors to EU funding - recently signed a joint letter calling for a cap of one per cent.

The British Government has argued that regional aid could be handed out more effectively by Whitehall, cutting the EU out of the loop.

During a Commons debate on EU finance, Dawn Primarolo, the Paymaster General, said the Government was determined to cut out the "wasteful recycling of funds that often happens".

She said: "If the commission is making promises, it is doing so on the basis of a budget that it does not yet have."

Some MPs claim struggling areas would receive only 50 per cent of existing Objective One funding under the Government's plans, which would give Durham and Tees Valley £430m.

The Government has described the proposed budget as "unrealistic and unacceptable", signalling a bitter battle ahead before an agreement at the end of next year.

In a further shake-up of structural aid, two-tier areas - including the North-East - stand to lose funding under the commission's proposals.

The Department of Trade and Industry estimates the proportion of population eligible for the aid will fall from 30.9 per cent to 9.1 per cent.

Industry Secretary Patricia Hewitt said this week: "The commission's proposals do not adequately meet the needs of disadvantaged areas of the North-East."

Regional Selective Assistance has been the main tool of Government aid for 40 years and is credited with bringing Nissan to Sunderland.