Warned by the European Union that it could lose community funds over a controversial anti-graft law it passed in January, Greece on Thursday signalled it would consider changing the legislation to safeguard its badly-needed EU income.

"If small changes are needed, then the government will proceed in a way that will not affect its fight against corruption in the slightest," government spokesman Theodoros Roussopoulos told reporters on Thursday.

The government's aim is "not to lose a single euro," Roussopoulos said.

The Greek conservative administration has staked much on the so-called "basic shareholder law", which forbids individuals that hold more than one percent of a media company's stock from bidding in state tenders. However the EU says the law goes against the principle of free competition.

The apparent volte-face has drawn catcalls from the socialist opposition, who accuse the conservatives of shaming Greece in Europe.

Thirteen months after it gained power, the Karamanlis administration already faces a drop in popularity, leading the opposition Pasok party by only 1.4 percent according to the latest poll. The fallout from the affair has relaunched talk of a government reshuffle.

A few weeks ago, Interior Minister Prokopis Pavlopoulos -- one of the law's architects -- had flatly ruled out any changes in an interview with top-selling Ta Nea daily.

The "basic shareholder" legislation came in response to claims that in the past, entrepreneurs with multiple business interests had used media in which they had influence to lobby for state contracts.

The ban extends to spouses, relatives, financial dependents, and to offshore companies controlled by any of them.

But the European Union holds that Greece's law is contrary to EU principles of free competition, and sent Athens a stern warning to that effect on Wednesday.

"Any request for EU funding involving public contracts on works and services... affected by (the) law will not be accepted," read a letter from Graham Meadows, the EU's general manager for regional policy.

The Union has given Greece until May 31 to ensure compatibility with EU regulations.

The legislation in question is to enter operation on June 14.

The Greek government argues that the "basic shareholder" law is an integral part of the fight against corruption, and follows tenets on media ownership set out by Greece's constitution.

"(Our) national interests demand that we defend both EU funding and (Greece's) constitution," Roussopoulos said Thursday, adding that the government will negotiate to find a "common ground" with the EU Commission.

Whilst on a working visit to Athens on Monday, EU Commission President Jose Manuel Barroso expressed a similar wish to avoid seeing the case reach the European Court of Justice.