Environmental lobby groups have also expressed their dismay at the outcome of the budget talks, suggesting that the environment has become the “forgotten victim” in the push to save money.

“For all their talk about sustainable farming and public money for public goods as set out in the recent Vision document from DEFRA and the Treasury, the government has failed to deliver,” said RSPB policy director Sue Armstrong-Brown.

She said it was a “terrible irony” that news of the budget cuts came on the same day as the EU Commission agreed to allow payments of up to 35/ha (24/ha) to farmers for extensive cattle grazing under the Higher Level Scheme.

“This money could now be jeopardised.”

In the short term, the RSPB would be encouraging the government to apply the maximum level of modulation to make good the shortfall in resources, said Ms Armstrong-Brown.

“But we will also be looking to the budget review agreed for 2008 for the EU to really address the issues of how money should be spent on the CAP.”

The RSPB says it is opposed to co-funding by national governments, as this serves as a disincentive for them to make most use of rural development policies.