The EU's tough negotiating stance could derail talks aimed at liberalising world trade, a group of MPs has warned.
Peter Mandelson leads the EU in trade negotiations
The EU made unrealistic demands that poor countries open their markets while protecting their own, said the Commons International Development Committee.
The MPs also accused the Prime Minister of raising "unrealistic" expectations of a global deal to help poor nations.
Instead it urged the UK to do more to ensure the EU agrees a deal on trade before a key deadline slips past.
The committee added that, despite Tony Blair promising a comprehensive deal to open up trade to developing countries during the UK's presidency of the EU last year, World Trade Organisation (WTO) talks had achieved only limited results so far.
It put the failure down to Mr Blair backing EU negotiating tactics during talks in Hong Kong in December 2005 where some nations, such as France, had been determined to protect their agricultural interests.
"We accept that there were limitations on what the government could achieve in terms of trade during its presidency, but these limits should have been acknowledged earlier on so as not to raise the public's expectations of the outcome unrealistically," the committee said.
It added talks had been hindered by the inconsistent approaches of both the EU and US. It attacked America for "shamefully restricting" an agreement on free access to its markets for the poorest countries.
Not everyone in Hong Kong thought free trade was a good thing
Meanwhile, the EU attempted to "change the rules at half time" by demanding that developing nations open up their services market in return for reducing tariffs on farming goods.
"Neither the Commission nor the UK should be pressing developing countries in this way," the MPs said in a scathing attack on the EU and its trade chief Peter Mandelson.
It called on the government to "pre-emptively" set out what it is willing to agree to in order to open up access to its markets.
"Such action would demonstrate leadership and political commitment to a development round," it added.
The committee chairman, Malcolm Bruce MP, said that so far "what we see is endless wrangling around the margins on issues that will not in the end benefit the poorest people".
The report came days after the WTO admitted it had pushed back key deadline to agree a "roadmap" to a trade deal from April to July as major players in the negotiations remained too far apart.
The report was welcomed by charities and trade justice groups who said it showed that the EU had only itself to blame for the talks hitting a standstill.
"This report shows that Peter Mandelson has been pursuing an anti-development agenda in the trade talks all along," War on Want campaigns director John Hilary said.
"The EU has been the cause of the crisis at the WTO, blocking every pro-development proposal and sticking stubbornly to its own pro-corporate agenda."
The World Development Movement (WDM), added that the UK had "behaved cynically and dishonestly" on trade.
The best outcome poorer nations could now hope for was that the talks collapsed, WDM policy chief Peter Hardstaff said.
"The talks do not now offer the prospect of a good deal for developing countries, only shades of a bad deal," he added.
The Doha Development Round was launched in November 2001 with the aim of bringing the benefits of free trade to poor countries.
A last-ditch attempt to revive the talks in Hong Kong in December 2005 made only limited progress, and time is running out as the US goverment's negotiating authority to make a trade deal runs out in July 2007.