Senior peers have urged ministers to allow the European Commission to negotiate a new aviation agreement between Britain and the US.

The Lords European Union committee said the Brussels authorities should be given a mandate to agree a fully liberalised EU-USA aviation market.

A spokesman for the Department for Transport said the recommendation was one possible outcome of talks currently underway within the European Union.

The issue has proved complicated as American authorities push for access to key European airports - particularly Heathrow and Gatwick - through a series of agreements with member states.

Last autumn the European Court of Justice ruled that some aspects of the agreements infringed EU treaties.

Subsequently, the Commission has sought the right to renegotiate aspects of the agreements on behalf of the member states, and is also seeking the competence to agree a comprehensive new "open skies" agreement with America on behalf of the whole EU.

In its report on the issues involved, published on Friday, the committee agreed that the Commission should be given "a limited mandate" to negotiate with other countries in order to bring existing bi-lateral agreements into line with the ECJ judgments.

The peers also said that member states should "give the Commission a wider mandate to negotiate an Open Aviation Area with the USA".

"It would not be in the European Union's interest or the United Kingdom's national interest to negotiate for anything short of a fully liberalised aviation market between the EU and the USA," the committee added.

Lord Woolmer, chairman of the committee, said "archaic restrictions on competition in air travel across the north Atlantic" should be overhauled.

"A fully liberalised market will allow airlines on both sides of the Atlantic to consolidate and restructure to help ensure a viable future. The UK has a strong aviation industry ready to benefit from these new opportunities," he said.

The government's current position does not rule out the possibility of agreeing to the committee's recommendations.

The DfT spokesman confirmed that "detailed discussions" are currently underway in Brussels.

The talks include the possibility of giving the Commission a mandate for dealing with the US.

However, British officials are "in touch" with their American counterparts regarding any changes that may be required to the existing UK-US agreement.