Labour minister Lord Rooker has slammed European Union state aid rules for hindering the regeneration of the poorest communities.

With government plans to promote regeneration being hindered by the failure to get the green light from the European Commission, the regeneration minister slammed Brussels red tape that left communities to suffer.

In December 1999 the commission ruled that a funding scheme administered by English Partnerships breached state aid rules, forcing the UK to replace it with a twin-track approach of notifying the commission of a range of new regeneration schemes while also seeking agreement in the longer term to a regeneration framework.

Lord Rooker said that the EU should introduce new rules to allow countries to pay state aid in areas "characterised by market failure", working in partnership with the private sector to tackle social deprivation blackspots.

"It's not just here in the UK that we have areas crying out for help in regeneration. Across Europe, communities are suffering because of misapplied red tape," said the minister.

"Like every government in the European Union we are committed to the regeneration of our most deprived areas. The best way of delivering sustainable regeneration is by working with the market.

"But we are hampered by the current state aid rules which place limits on the extent to which we can work in partnership with the private sector."

The government has said it would continue to push the commission to introduce a new regeneration framework which would allow the payment of state aid for regeneration.

Lord Rooker said there was an "urgent need" for reform. "This is something we are trying to get agreement on from all our partners in Europe - for all our sakes," he added.