A Tory minister has ramped up coalition tensions over Europe by complaining that the UK is being forced to waste huge sums on undeserving causes.
International Development minister Alan Duncan said the EU is failing to focus aid on poverty and suggested that the government could reclaim control of how the money is spent.
The remarks will delight many on the Conservative right who have been urging David Cameron to claw back powers and cash from Brussels.
The prime minister is also expected to face more pressure over Britain's overall aid spending at the party's conference in Birmingham next week.
One sixth of the Department for International Development's (DfID) budget, around £1.6 billion, is diverted to the EU's EuropeAid vehicle.
But the Sunday Telegraph newspaper raised questions about projects receiving money from the pooled budget.
Some £800,000 has reportedly been allocated to a water park being built in Morocco by the company behind Center Parcs. Britain has not considered the country a worthy candidate for bilateral aid for a decade.
In the strongest public criticism yet by a member of the government, Duncan told the newspaper that the EU's aid has to be reviewed.
"We share the people's anger on this. We are forced to give money to the European Union. We ask them to focus aid on poverty but they don't, and we have no choice in the matter," he said.
Duncan said he hopes that the process would be considered as part of the government's wider review of EU competencies and conduct, which is looking at the potential for repatriating powers.
Separately, Tory backbenchers have demanded that the UK stop pumping £4.2 billion into Europe's "structural fund" which encourages development in poorer member states, and instead redirect the cash for 2014-20 to help with the domestic economic recovery.
Fresh Start Group co-founder Andrea Leadsom said: "Instead of recycling British taxpayers' money throughout the EU, we should be taking these decisions at Westminster. This new plan would be a vote winner in the bigger member states who would benefit from it. It would be a repatriation of powers that should never have been handed over in the first place."
Cameron has been treading a fine line of reassuring restless Tory MPs that he is serious about a fundamental renegotiation of relations with Europe, without making any explicit promises.
But any effort to force changes before 2015 will encounter fierce resistance from the Liberal Democrats who have already dismissed the idea of exploiting the eurozone crisis to loosen ties.
The premier has also repeatedly batted away demands to abandon the target of 0.7% of UK GDP going on aid by 2015. DfID is the only department apart from health to be exempted from the coalition's austerity drive.
Tory MP Douglas Carswell said ministers are recognising that arrangements with Europe are "indefensible".
He said: "There are two issues that matter where the Whitehall elite are most out of touch, and that is Europe and the way that aid money is distributed.
"There is a bit of a sea-change. We are coming up to the moment of reckoning with the voters, and ministers are changing from defending ingrained assumptions to recognising that their departments have got things wrong."
Carswell stressed that he supports spending on international aid but channelling funds through questionable EU institutions "could not be right".
He added: "If we are going to be able to defend 0.7% (of GDP) on overseas aid, we have got to make sure that every pound or euro is properly spent."
A DfID spokesman said: "As a result of UK pressure, the EU is reviewing its entire approach to aid: cutting funding to countries that don't need it; refocusing its aid on results; and ensuring greater transparency, value for money and accountability."
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