Ministers meeting in Luxembourg are expected to back proposals for a cut of up to 20 per cent in the annual subsidy worth pounds 500 a hectare. They will also agree to more vigilant policing of farms to guard against abuses.
Suspicions in Brussels were raised by a sudden explosion in the area of land given over to the cultivation of hemp, a crop which is legitimately grown to make rope canvas and other textiles.
The area jumped from around 10,000 hectares in 1995 to 40,000 hectares last year with most of the pounds 10m in annual subsidies claimed by farmers in Britain, the Netherlands, France and Spain.
Although hemp contains only a small amount of the active ingredients which gives cannabis its appeal, it is a member of the same crop family as the illegal plant.
"The leaves look much the same, so we are concerned that some people may be concealing cannabis in the middle of their hemp fields and claiming the subsidy," a European Commission spokesman said.
The clampdown has also been prompted by a tip-off suggesting that one of the big hemp processing firms in the Netherlands also has a stake in a chain of "coffee shops" the Amsterdam cafes where dope smokers can indulge their habit without fear of prosecution.
Some EU aid programmes will be stripped of cash after Britain's successful legal challenge over community spending, the European Commission confirmed today.
Officials in Brussels are working out how to restore cash support for poverty and social improvement schemes.
The spending crisis was triggered by the former Tory government's decision to question the legality of a pounds 200,000 grant from Brussels to help the "socially excluded", including prostitutes.
The money had been cleared by Eurocrats without referral to EU ministers, on the grounds that it was "non-significant" short-term cash support from the euro-budget.
But last month the European Court of Justice backed the UK's case that the Commission had no power make such grants without governmental approval, even when relatively modest amounts are involved.