(BRUSSELS) - EU governments on Monday rejected a proposal to sharply reduce the biggest agricultural subsidies, a measure that would have hit British and German farmers in particular.

"Significantly lowering the upper payment threshold may have adverse effects on farming in some member states," the EU agriculture ministers agreed in a joint statement following talks in Brussels.

The rejection of the proposal by the EU's executive arm, the European Commission, came as no surprise after many of the 27 member states had voiced opposition in recent months to the move to bring down farm subsidies.

However, the joint statement now obliges the Commission to go back and redraft its proposals.

The proposal to cap the biggest subsidies had prompted warnings that it could lead farmers whose aid exceeds the limits to split their farms up.

Under the proposal, farmers who receive the biggest hand-outs would see their subsidies progressively reduced.

London and Berlin led opposition to the cap proposal, which would in particular hit aristocratic landowners in Britain and former communist cooperatives in eastern Germany.

Czech and Danish farmers would also have been hit particularly hard.

EU farm commissioner Mariann Fischer Boel first made the suggestion last November under broader proposals to reform the EU's Common Agricultural Policy.

The European Commission also proposed phasing out milk quotas, scrapping rules on keeping land fallow and guaranteeing minimum cereals prices in addition to capping hand-outs to farmers.

She will put forward definitive legislative proposals in May to which the member states are due to respond by the end of the year.

At the moment some 80 percent of EU farm subsidies go to about 20 percent of its farmers.

The Commission had suggested progressive reductions until the total annual subsidy to an individual enterprise does not exceed a fixed figure, expected to be around 100,000 euros.

A first attempt, in 2002, to cap farm payouts to 300,000 euros was similarly abandoned due to British and German opposition.

Agriculture and Fisheries Council

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