More than half of Europe's development aid budget is going to "middle-income" countries which should not qualify, MPs have warned.
A report by a House of Commons committee challenges the UK Government, which provided £1.23 billion in aid via the EU in 2010, to demand tougher standards to ensure support goes to the neediest nations.
"British taxpayers want the aid they give to go to the places where it can make the most difference, to countries where millions of people are getting by on less than a pound a day," said Liberal Democrat MP Malcolm Bruce, who chairs the International Development Committee.
The committee's report reveals that only 46% of EU aid for developing countries goes to low-income states: an "unacceptable" figure.
The rest, it says, goes to relatively better-off countries, many neighbouring the EU such as Turkey and Serbia. "Turkey has consistently been in the top five recipients of European Commission aid (£182 million in 2010) as has Serbia (£178 million in 2010)" it says. Mr Bruce warned: "Giving aid to relatively rich countries like Turkey could devalue the concept of aid."
The committee urged the UK to demand that future funding be diverted from higher middle-income countries bordering Europe to give greater help to the poorest people in the world. That, says the report, involves challenging the definition of official development assistance (ODA), through which the relevant EU aid is spent.
Mr Bruce said: "Ministers must be bolder in challenging the definition of what qualifies as ODA. It appears to be being used as a way of fudging the figures to help other European countries meet the (internationally agreed) target for 0.7% of GDP to be given as aid."
The report says: "The DFID (Department For International Development) Minister told us that 'it would take forever and be difficult' to change the definition of ODA so as to exclude relatively wealthy countries and that a change in the definition would make it difficult for some countries to meet the 0.7% target. We do not accept this: the Government should be bolder and less risk averse by tackling the criteria for ODA so that more funding goes to the world's poorest people and the poorest countries, and less to the European neighbourhood. Failure to do this may undermine the UK public's support for EU institutions."
The committee praises the benefits of the EU as a conduit for development aid, saying some member states would spend less on aid were it not for the European Commission. The EU has a presence in countries where the UK has no bilateral aid programmes, enabling London to play a part in development support for countries such as Niger and Haiti.
But the report says that, in doing the best for poor nations, the UK should "lead by example" by making progress towards achieving the 0.7% aid-giving target: "Only by meeting the target ourselves can we continue to put pressure on other EU member states to do the same, particularly Germany, France and Italy."