* Trade, internal market questions top list of concerns

By Charlie Dunmore

BRUSSELS, 27 Sept (Reuters) - Proposals to let EU states decide for themselves whether to grow or ban genetically modified (GM) crops suffered a big setback on Monday as many of the bloc's largest governments confirmed they opposed the plans.

To pass, the proposals put forward by the European Commission in July will need the support of a majority of European Union states and lawmakers under the bloc's weighted voting system, which gives larger states a greater say in the final decision.

At a meeting of EU farm ministers in Brussels on Monday, Germany, France, Italy, and Spain all expressed grave doubts over the viability of the plan, and questioned its conformity with the bloc's internal market rules.

"I don't think that we can expect a compromise or a consensus over the next couple of months -- a great deal more work is going to have to be done," Belgian agriculture minister Sabine Laruelle, who chaired the meeting, said afterwards.

Belgium, which currently holds the rotating presidency of the 27-nation EU, had asked the ministers whether they felt the proposals were compatible with the bloc's internal market and World Trade Organization (WTO) rules.

"The German reply was very short indeed -- 'no, and no'," an EU source in the meeting told reporters.

France, Spain and Italy said they want decisions on GM crops to continue to be taken collectively at EU level, as at present.

"We believe that moving to national decisions would represent a breach (of EU decision making) that would be dangerous for economic reasons, health reasons and for political and social reasons," French farm minister Bruno Le Maire told journalists before the meeting.

Even Belgium broke with the tradition of remaining impartial as holders of the EU presidency, after Laruelle said at a press conference that the country's position was "similar to that expressed by France and others".  Austria, Hungary and the Netherlands were among the few countries to express support for the plans during the debate, sources said.

Britain, while frustrated by the current impasse between EU governments over GM crop approvals, said it needed greater legal clarity on the proposals before taking a position.

DALLI DEFENDS PLANS

EU health and consumer chief John Dalli defended the proposals, and said he still hoped a deal could be reached in the coming months.

"I am confident that the approach proposed by the Commission is a balanced one, it does not undermine the internal market and is not in contradiction with the WTO rules," he said.

In fact, the EU's current stance on GM crops -- with six countries maintaining national "safeguard" bans on cultivation -- was a greater trade concern, he said, and placed the EU in "a very weak position" within the WTO.

But Dalli stressed that the proposals were open for debate and could be adapted to reach an agreement between EU governments and lawmakers.

EU environment ministers are due to debate the plans on Oct. 14, while the European Parliament will begin its deliberations in the coming months.

But given the strong opposition of the EU's largest member states and the few signs of support from the rest, there is little to suggest an agreement will be reached soon, if at all. (Reporting by Charlie Dunmore, editing by Anthony Barker)