European Union funding for the West Midlands is to be cut by half following the admission of poorer new member states from Eastern Europe.

The region has been allocated £459 million, or 685 million euros, over the next seven years.

This is a massive reduction on the 1,430 million euros received from 2000-2006.

The funding, known as EU Structural Funds, will be concentrated instead on poor nations such as Poland and Hungary, which joined the EU in 2004.

The West Midlands has suffered larger cuts than some other parts of the country such as Wales and the West Country.

This is because the region's economy has grown more quickly than in other parts of the UK, the Department for Trade and Industry said last night.

A spokesman also pointed that the EU funding made up only a quarter of total aid to the regions.

John Edwards, chief executive of Advantage West Midlands, said the cut in EU funding would force the region to make "tough choices".

AWM, the regional development agency, will take responsibility for the Regional Development Fund, which makes up £240 million out of the region's total allocation.

He said: "We are already consulting widely to ensure that every part of the West Midlands region has its say in how this money will be spent from next year so that it makes the biggest possible impact in the region. The level of funding we are receiving is half that of previous years so as a region we will have some tough choices to make.

"But we will be working with our partners to ensure we get the best possible return for every pound we spend and help more businesses and create more jobs to achieve greater prosperity for our region."

Britain's overall allocation has been cut from £10.6 billion (15.85 billion euros) over the current seven-year period to £6.7 billion (9.6 billion euros) as funding is directed towards the poorer new member states.

Industry Minister Margaret Hodge said: "We are confident the rules we have drawn up will mean the money is used in the fairest way for every region. No one is excluded.

"Whilst we are proud of our economic record, we know we have more to do to tackle regional disparities in economic performance.

"These funds will help us to bring the performance of our poorest regions up to the performance of the best."

New members joining the European Union in 2004 included Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

Bulgaria and Romania will join on 1 January 2007 while Albania, Bosnia, Kosovo, Montenegro and Serbia are expected to join in future.

Many of the Eastern European states are desperately poor compared with the UK.

In Poland, Gross Domestic Product is $12,994 per person while in the UK it is $ 30,436 per person, according to the International Monetary Fund.

The UK is a net contributor to the European Union, making payments which far exceed the money returned back in grants such as the Structural Funds.