PLANS to slash payouts for slaughtered animals when a farmer is blamed for spreading foot and mouth disease have been dropped by the government.

Ministers have caved in to pressure from the farming industry over one of the most controversial proposals to prevent a repeat of last year's epidemic.

Under the Animal Health Bill, compensation was to be reduced by 25pc if a farmer failed to take adequate precautions to stop the spread of foot and mouth or other diseases.

But, speaking in the House of Lords, agriculture minister Lord Whitty accepted that the measure would not be passed by the upper house. He said he regretted that the farming industry and opposition parties were not willing to penalise environmentally-unfriendly farmers.

Lord Whitty also agreed to make it easier for farmers to appeal against Government officials entering their farms or enforcing a compulsory vaccination or slaughter policy.

And he said he would strengthen the conditions the Government will have to meet when justifying entry to a magistrate.

But Lord Whitty again hinted that the Government would never again underwrite the massive costs of a foot and mouth outbreak. Last year's epidemic cost the taxpayer £3 billion.

He announced a review of the compensation system - raising the possibility of a nation-ide levy on farmers or a market-based insurance scheme.

The Animal Health Bill, which will allow vaccination to be used in the event of another outbreak, has been attacked as draconian by some farmers.

Updated: 09:51 Wednesday, October 09, 2002