Germany has blocked a big pay rise for most members of the European Parliament, that would have seen euro-MPs from new member states in eastern Europe earn more than their prime ministers.
By Oana Lungescu and Laszlo Matzko
At a meeting of EU foreign ministers, Germany - together with France, Austria and Sweden - said the reform package was too generous and would have to be readjusted by the European Parliament.
But the decision also means that the current expenses system for euro-MPs, criticised for decades as a "gravy train", will remain unchanged ahead of the elections for the European Parliament next June.
MEPs had approved the changes
At the moment, the 626 euro-MPs and the 162 observers from the future 10 member states are by no means equal when it comes to pay.
All receive the wages they would get back in their own national parliament, meaning the Italians are the best paid at around 11,000 euros a month. That is four times what their Spanish colleagues, on 2,600 euros, earn.
The disparities are even more glaring when it comes to the new member states.
MPs in countries like Lithuania, Slovakia, Hungary, the Czech Republic and Poland earn between 800 and 2,500 euros a month.
Under the new proposals, all euro-MPs would have got the same salary of 8,600 euros a month.
But German foreign minister Joschka Fischer said it was the wrong time to agree on the new pay package in light of deep budget cuts at home.
German law professor Hans Herbert von Arnim, who studies the pay of EU civil servants, believes the plans would have also created even more inequality.
"A parliamentarian from Hungary or Poland or Slovakia will get three times as much as his prime minister at home, four times as much as his ministers, 25 times as much as the average voter," he told the BBC.
"These things will do big harm to the European idea and will damage the European Parliament very much in the eyes of the electors in these countries and in the eyes of the tax payers in Germany and Britain and other Western countries because they have to pay these things."
Under the proposals, new member states could have opted out of the hefty pay rise - at least for a transitional period.
But in fact the pay rise was a compensation for scrapping the lax expense system, by far the most criticised aspect of the current system.
Under the failed proposals, euro-MPs would have been able to charge only for actual expenses incurred, with receipts attached. At the moment, they can charge the highest air fare when going to Brussels or Strasbourg regardless of how they actually get there.
"Let's say you fly from Ireland to Brussels and you take Ryanair. You pay very little, but you get refunded the full economy class fare, which can be often as high as a business class ticket. And MEPs can then pocket the difference," Dutch socialist euro-MP Michiel van Hulten explains.
"That has to change because there's clearly no justification for it. There's a historical explanation for it (because of the national pay differences), but I think that today it's just not acceptable, especially as we go into an enlarged EU with 10 new member states joining, I think we have to get our house in order."
There have been failed attempts to change the systems of perks for euro-MPs for years, if not decades.
But, as it shuttles between its two headquarters in Brussels and Strasbourg, the European Parliament has not managed to improve its public image of a gravy train combined with a travelling circus.
When the number of euro-MPs jumps from the current 626 to 732 at the June elections, the bill is likely to go up again - and the voters may like the European Parliament even less.
Cynics say that some German euro-MPs have lobbied Chancellor Gerhard Schroeder to stick to the current system, simply because the scrapping of travel perks would do away with their pay rise.
Ireland, which holds the EU presidency, has promised to do its best to push through the changes, aware that after expansion, a deal may become much harder to get.
But, with elections for the European Parliament scheduled for mid-June, time is fast running out.