Sri Lanka had denied entry to an official EU human rights team.

Cheap and good quality Sri Lankan-made garments are widely available in Europe, including British retail stores such as Next, Tesco and Marks & Spencer, under a duty free regime introduced to aid Sri Lanka's economic recovery after the 2004 tsunami.

The Times said the EU move threatens to destroy the livelihoods of 250,000 workers. In addition, the garment industry indirectly supports up to a million Sri Lankans.

It quoted an EU diplomat as saying, 'Given how critical the [human rights] report is, and how Sri Lanka is likely to respond, it will now be very hard to extend it.'

President Mahinda Rajapaksa has formed a committee of four cabinet ministers to formulate Sri Lanka's response to the EU charges.