A top Brussels official has warned Britain that its annual rebate from the European Union has run its course.

Budget commissioner Michaele Schreyer said in an interview on Thursday that the rebate should be replaced with a mechanism that also takes into account the needs of other major EU nations like Germany.

The EU's budget, which stands at over 90 billion euros per year, comes up for a seven-year review in 2006.

All aspects of EU spending, including the controversial UK rebate, will come up for renegotiation.

Germany has signalled in the last five years that it is no longer willing to bankroll the EU and Schreyer's blueprint would go some way to compensate Berlin for paying more than any other country into the Brussels budget.

Speaking to the FAZ newspaper, the commissioner outlined plans for a ceiling on payments from net contributors to the budget. The limit would be a proportion of national GDP, it was reported.

There was no question of doing away with the UK's rebate altogether, Schreyer conceded.

But the commissioner added there was no consensus for continuing the mechanism as it stands.

Then prime minister Margaret Thatcher negotiated the refund in 1984 to compensate the UK for comparatively low returns from the otherwise generous Common Agricultural Policy.

Two years ago the UK even became a net beneficiary of the European budget thanks to the rebate, while Germany is still paying for around a quarter of EU expenditure.

Outline budget proposals are due to be published shortly.