The European Commission will today tell the Government to open up the Irish market in gas within two months or face action in the European Court of Justice.

Ireland is one of 10 countries facing the prospect of legal action for failing to liberalise energy markets two years after agreeing to do so.

A spokesman for Energy Commissioner Andris Piebalgs said yesterday that today's warning is the second that Ireland has received about its failure to open up the gas market to new providers.

A Government spokesman said legislation to liberalise the gas market was in preparation and that it would be on the statute books as soon as possible.

Ireland has already enacted legislation to implement a directive liberalising the market in electricity.

However, eight EU member states, including Germany and Spain, have failed to liberalise their markets in either gas or electricity, despite warnings from Brussels.

Mr Piebalgs and Competition Commissioner Neelie Kroes are due to review the EU's progress towards creating an internal market in energy later this year.