The proposals come at a time of rising global food prices and the need to stabilise the food market.
At the start of talks in Brussels on Monday, EU agriculture ministers agreed that food production needed to be increased.
But most of them spoke against dismantling the system of farm subsidies and regulation as demanded by Britain.
The commission also faces strong pressure from farmers not to cut their subsidies.
Gerd Sonnleitner, vice-president of COPA (committee of professional agricultural organisations), a farmers' lobby, defended the CAP.
Sonnleitner said: "We are a strong economic power, we offer citizens high-quality, cheap food, reasonably priced food and the CAP policy can insure that this will remain so in the future."
The blueprint for reform needs to be approved by the EU's 27 member states and the European parliament before it can take effect.
More than 40 per cent of the EU's $155bn annual budget is spent on farm subsidies, traditionally a part of the budget that is set years in advance.
Currently, 20 percent of farmers receive 80 per cent of the direct farm subsidies in the EU's 27 member states, with France the biggest beneficiary.
Mariann Fischer Boel, the EU's agriculture commissioner, called for the EU to take a more hands-off approach to farming in Europe, doing away with production-linked subsidies, which would give farmers more freedom to chose what and how much to grow or produce.
The commission said it wanted to progressively cut subsidies to farms according to the sum they get and shift the money saved to protect and promote traditional family farms.
Gerda Verburg, the Netherlands minister of agriculture and food quality, said: "The European common policy can help to relieve the problems but that's not easy because we have negated too long the investments in agriculture."