The European Commission said yesterday that a deal between the Group of Seven finance ministers on how the European currency zone would be represented was incompatible with the EU's governing treaty.

Commission spokesman Mr Patrick Child said that EU Commissioner for Economic Affairs, Mr Yves-Thibault de Silguy, had not been consulted on the decision, but that "such a decision . . . would be highly unlikely and would obstruct the implementation of the [Maastricht] Treaty".

French finance minister Dominique Strauss-Kahn said on Saturday that ministers from the G7 had settled the long-simmering dispute by agreeing to split future meetings into two sections and varying the attendance at each. The dispute over how the euro zone should be represented at the G7 was a result of the smaller countries in the single currency trying to have a voice at the meetings. The United States, in particular, was strongly opposed to further European voices joining the four countries from Europe which already have seats at the G7 table.

Meeting in Frankfurt, G7 finance ministers agreed that the first section of G7 talks would focus on the world economic situation and exchange rate issues, sources said. This section would be attended by the finance minister currently holding the chair of the euro-11 group and the European Central Bank president.

In the second section, which would address all other issues relating to the international financial system, the governors of the national central banks would be present.