Britain has failed in its bid to persuade Europe to drop plans for the compulsory ear-tagging of all sheep from next year.

But farming organisations say they will continue to battle against proposals which threaten to pile up immense costs for West Country sheep producers.

The European Commission wants every sheep in the community tagged to improve traceability and animal movement records.

But the only realistic way the system can work is by using electronic tags and scanners.

And farmers say the technology is neither proven nor infallible – but will cost them dear.

At worst, critics say a third of all sheep flocks could disappear because of the expense of the scheme.

Despite pleas from Britain's Jane Kennedy, European farm ministers refused to withdraw the scheme yesterday.

An agenda item from Hungary calling for the system to be made voluntary won support from Germany, Ireland, Greece and Eastern European states.

But without the backing of heavyweight members such as France, Portugal, Spain and the Netherlands the bid failed.

Peter Morris, chief executive of the National Sheep Association said there was widespread disappointment there had been too little support for the Hungarian amendment.

"Our own Government did support the proposal, which is welcome," he said.

"And perhaps the penny is at last starting to drop about how difficult these regulations might be for sheep industries in all member states.

". If electronic ID had been made voluntary, as the Hungarians proposed, that would be fine, but if the underlying requirement to record the individual identities remained in place then very little would be gained.

"Can you imagine trying to record all those numbers manually in a commercial situation?

"It is a very difficult battle we are fighting but everything is not yet lost."

NFU Scotland president Jim McLaren said the item was unlikely to come in front of ministers again and a wholesale change to the regulation was 'off the agenda'.

But, he said, flexibility in implementation could lead to further discussion.

And Liberal Democrat Defra spokesman Tim Farron urged Ms Kennedy to continue the campaign against compulsory tagging.

"Compulsory sheep tagging will increase the input costs being placed on livestock producers, auction markets and abattoirs which could ruin the financial viability of the industry.

"The average wage for a sheep farmer is just £6,000 per year, which is as about as much as a tag reader is expected to cost," he said.

"If there is to be further dialogue, the UK must now take a leading role instead of leaving it other nations to raise the case for our farmers."