Brussels/Paris - A spokesman for the European Commission on Monday denied that Brussels was blocking the French bank bailout, after French media reported that the 10.5-billion-euro (13.24- billion-dollar) plan was in trouble.

"There is no blocking. The commission is working with the French authorities," European Commission spokesman Johannes Laitenberger told reporters in Brussels, adding that a decision on the plan could come as early as this week.

Laitenberger said the commission was not against any increase in lending by French banks. "We just want to assure that the money is used to provide loans to the real economy," he said.

He noted that officials in Brussels were "surprised" by the French media reports.

The daily Le Figaro headlined its front page on Monday "Brussels blocks plan of support for French banks," while Le Monde reported that Paris and Brussels were engaged in a "tug-of-war" over the measure.

The stories were based on comments by European Commission President Jose Manuel Barroso during an interview on French television on Sunday, when he had suggested that Brussels was taking a hard look at the French plan.

"The commission's duty is to apply the rules. If the rules are not respected, you get the law of the jungle," he said, noting that the EU was particularly wary of "competitive distortions" being introduced into the European banking sector

Under the French proposal, the government would subscribe to subordinated five-year debt issued by the six banks. In exchange, the French banks would commit themselves to increasing their loans to individuals and companies by 3 to 4 per cent in 2009.