The new measures, which are already proving controversial, aim to reduce the bloc's 1.5bn-litre 'wine lake' through a number of reforms regarding supply, formulation and marketing.

Despite a global increase in demand for greater quality products, consumption of EU wines is currently falling.

As a result, imports to the bloc have increased over the last decade by 10 per cent, while exports have grown far slower, according to EU figures.

Fischer Boel believes therefore that the industry must refocus its priorities if it is to successfully compete with rival new-world producers.

"We currently waste too much money - over [a third] of our budget - getting rid of surplus wine instead of improving our competitiveness and promoting our wines," she said.

Though accepting there had been improvements within the wine trade balance since the proposals were announced a year ago, Fischer Boel still believes the reforms offer the best long-term hope for the industry.

"We still forecast that, under current policies, in the years ahead we would run an annual surplus of almost 13 million hectolitres," she said.

The new proposals will focus in part on the cancellation of subsidies and market support for the region's producers, in line with on going reforms to the entire EU agricultural sector.

It is hoped the abolition of such measures will end the practice in the EU of paying nearly half the annual wine budget, €500m, to distil wines that won't sell into undrinkable, industrial alcohol.

The EU will also offer incentives for producers wishing to leave the industry to dig up vineyards to reduce overproduction as part of a process known as grubbing-up.

An initial budget of €430m will be set aside for the first year to encourage producers to dig up unproductive vineyards at a rate of €7,174 per hectare removed. By the fifth and final year, the budget will be reduced to €59m, with producers receiving about €2,938 for each hectare.

This practice could be limited within member states for certain vineyards on mountains and steep slopes, where there may be concern for the environment.

All-in-all the EU hopes through grubbing up to reduce the amount of vineyards in the bloc by about 200,000 hectares.

The scheme will be backed by a rural development plan that would create a funding scheme to set up young farmers, while also providing help with marketing and vocational training.

In terms of quality, the use of sugar to enrich wines would be prohibited under the new rules, while the EU will also retain bans on imports of musts for vinification and blending EU wines with foreign brands.

In a further bid to ensure quality throughout the sector, the reforms will also bring about changes to existing labeling practices through the use of the Geographical Indications (GI) scheme.

It is hoped the scheme would offer greater protection to quality wines related to a specific region or production type against European and international rivals.

Even wines unable to claim GI, would still be required to indicate the products variety and vintage on its label under the labeling amendments.

The EU also agreed to allow production techniques designed for making wines unique to specific export markets.

The EU will also grant a budget of €120m to co-finance to promote the bloc's wines outside of the EU, to increase international market share.

Under the reforms, there would also be a greater focus on increasing awareness of GI on products alongside a drive to encourage responsible consumption of wine

Funding would also be set aside for agri-environmental schemes to improve the industry's environmental impact.

In announcing the new measures Fischer Boel was confident they could boost the reputation and success of wine production.

"I am convinced my proposal will reinvigorate the European wine sector and allow us to take our rightful place as the world's biggest and best," she stated.

Though wary that adopting reforms would require some producers to give up their livelihoods, she believed that the proposals gave sufficient support to those taking the decision.

"This exit process can be a dignified transition rather than a rout," she added.

However, even before the announcement of the proposals, opponents of the reforms have been making their opinions on the subject well known.

Mounting tension among within some of the bloc's wine heartlands, particularly in France, is already beginning to split opinion in the nation.

Producers within the Herault region in the south of the country, an area expected to be hit particularly hard by the reforms, have become bitterly divided over the proposals.

On Monday, producer resentment escalated from angry words at a 300 strong protest against the reforms in the town of Bezier, to a bomb blast at the wine co-operative union headquarters in Montpellier.

Some local producers claim the proposals are prosecuting smaller "family" farms and destroying a way of life for many in the region.

It is not just industry hardliners in the country who are dissatisfied with the new proposals.

The country's agriculture minister, Michel Barnier also expressed doubts over wether the changes can work.

"Although France can share the main objectives of this reform, substantial differences have appeared concerning ways to implement it," he said.

A spokesperson for the EU said that the proposals must first be passed within the European Parliament and the Council of Ministers before being finalised.

Though he expected a deal on the reforms by the end of the year, or at latest early 2008.

Within this timeframe, the reforms would therefore be likely to come into place by August next year, the spokesperson added.