In a scathing report on the current system, the Commons International Development Select Committee will call for a "refocusing" of the EU's priorities to restore credibility to its aid programme.
One third of the UK's total overseas aid, equivalent to pounds 530m, is spent through the EU and the MPs will today call for a revision of its direction and day-to-day running.
The Secretary of State for International Development, Clare Short, is understood to be sympathetic to the committee's concerns and is likely to insist on a freeze in UK contributions to the EU budget unless it adopts some of the proposals.
MPs and ministers are furious that funds have gone to some fairly wealthy states in the Arab world at the expense ofmuch poorer states such as Ethiopia and Bangladesh. The MPs were horrified that Morocco, which is accused of human rights abuses in its illegal occupation of Western Sahara, comes out on top of the list of aid recipients.
Morocco receives eight times more EU aid per head than Bangladesh and Ethiopia. In terms of European development aid per head in 1996, Jordan got pounds 15.56 compared with 53p for Ethiopia and 6p for India. One member of the committee said last night: "The strategic interests of some southern European states has meant that politics rather than poverty has dictated the aid budget. An aid budget should be based on need."
The reasons for the shift away from those countries most obviously in need to those with political links to Europe should be made clear, the MPs will say. Most important of all, tighter guidelines should exist to reassure the public that their money went to the very poor.
The report will also detail severe shortcomings in the European Commission's administration of the aid budget. For every pounds 1 allocated, about 27p remains unspent, largely due to inefficiency.