An EC report said that the two countries still needed to work harder to overcome corruption and organised crime and to  ensure the proper use of EU funds and food safety.

 

It will install safeguards - such as the possibility of withholding EU funding, the temporary suspension of EU rights, banning the sale of unsafe food and the non-recognition of certain civil and criminal judgements or arrest warrants - that can be applied up to three years after the countries join.

 

The EC said in a statement that "Bulgaria and Romania have carried out an extraordinary reform process and they have gone through a remarkable transformation.

 

"However, there are still a limited number of areas where  further progress is needed in the months leading to accession and beyond."

The move comes despite public unease about further enlargement of the 25-nation bloc.

The conditional sanctions are meant to reassure critics of enlargement who say the countries are too poor, corrupt and weak to cope with EU membership, officials say.

Jose Manuel Barroso, European Commission president, and Olli Rehn, EU commissioner for enlargement, will visit Bulgaria and Romania on Tuesday and Wednesday to explain the EU recommendations.

Foreign investment

Bulgaria and Romania have struggled in the run up to accession, scheduled for January 2007, to receive the benefit of EU funds because of slow reforms in state administration.

Workshops on how to apply for funds across different sectors of the economy are being carried out by the ministries involved in an attempt to prepare businesses to benefit from EU funds.

Upon entering the EU, the two countries are expected to sustain their already impressive growth rates, bring in foreign investment and encourage tourism.

Traian Basescu, Romania's president, said: "Only with this will the biggest historical wave of EU enlargement be completed - a direct consequence of the collapse of communism." 

By raising the possibility of withholding some membership benefits if the two countries are not up to scratch, Brussels is also seeking to smooth ratification in national parliaments that have not yet approved the accession treaty, notably Germany.

EU diplomats say that after the entry of Bulgaria and Romania, the rate of expansion will slow.

Croatia is next in line.