French and Belgian employment ministers have walked out of a European Union meeting in the Portuguese capital Lisbon in protest at the presence of an Austrian minister belonging to the far-right Freedom Party.

"It was a political and symbolic gesture," the French minister, Martine Aubery, said.

It was the first EU ministerial meeting since the controversial new Austrian Government was sworn in.

Both ministers returned to their seats once their Austrian counterpart, Elisabeth Sickl, had finished addressing the meeting.

Earlier on Friday, Portugal, which is currently EU president, cancelled group ceremonies and social events.

The Czech Prime Minister Milos Zeman also announced that his government would cut high level contacts with Austria.

The decision comes after a week of tension between Prague and Vienna over calls for compensation for ethnic Austrians expelled from Czechoslovakia at the end of World War II.

The inclusion of the Freedom Party in the Austrian Government has caused anxiety across Europe as well as in the US and Israel. The party's leader, Joerg Haider, has in the past made comments sympathetic to the Nazis.

Individual EU states have downgraded their contacts with Austria.

'Exaggerated reaction'

Ms Sickl, the newly-appointed Austrian minister for employment, health and social affairs, described the reaction as exaggerated and said her government should be judged on its actions alone.

"The other states will discover that we are tolerant and co-operative," she said.

When informed that the traditional group photo and outing had been cancelled, Ms Sickl said: "One should be more generous."

'Haider is no Hitler'

Meanwhile in Brussels, at a meeting of the Organization for Security and Co-operation in Europe (OSCE), Austria's foreign minister said that Mr Haider was not a fascist, and had never collaborated with Belgium's own far-right group.

"Mr Haider is not a junior Hitler, but a populist from the right," Benita Ferrero-Waldner said.

"Mr Haider is not a Hitler, that is absolutely false. I must tell you, and I am saying this because they have told me, that the Freedom Party has never joined forces with the Vlaams Blok," she added in a reference to Belgium's Flemish right-wing group.

Mrs Ferrero-Waldner repeated the pleas that the new Austrian Government be judged by its actions.

She also asked her Belgian counterpart, Louis Michel, to "lower the tone" of harsh criticism he used about the inclusion of the Freedom Party in the Austrian Government coalition.

The United States has expressed concern that the controversy will hamper Austria's ability to hold the chairmanship of the OSCE.

"We are concerned that your government now includes a party whose leader has made statements expressing sympathy for the Nazis and minimising, even excusing the tragedy of the Holocaust," said David Johnson, chief US delegate to the OSCE.