Brussels is looking at how to compensate european fishermen that lose out from brexit by handing them part of britains old fishing rights in eu waters, as it seeks to unblock one of the toughest remaining issues in the eu-uk future relationship talks.

Michel barnier, the eus chief brexit negotiator, urged eu governments this week to moderate their demands for retaining existing fishing quotas in british waters, warning them that they had to be realistic on what could be secured.

But diplomats said that brussels had emphasised that the blow could be softened for france, denmark, belgium and other fishing nations by intelligently reallocating old british quotas in the eus post-brexit exclusive fishing zone.

The matter will also be sensitive for britain because of the risk that, depending on the eus priorities, particular british coastal communities could be hit.

The plans, which diplomats said were being discussed among eu member states, would be a way of partially offsetting reduced opportunities to operate in british waters, showing that sacrifices are being made by the sectors on both sides of the english channel.

Fishing rights are one of the biggest sticking points in the uk and eus future relationship talks.

The eu went into the future relationship negotiations seeking to uphold access to british waters as well as existing catching rights for more than 70 types of fish that straddle the eu-uk maritime border. britain, on the other hand, wants to ditch the old model for dividing up quotas and make access to its waters conditional on successful annual negotiations.

Although the eu fishing sector employs fewer than 180,000 people and accounts for less than 1 per cent of the blocs economic output, capitals warn that their coastal communities risk devastation from brexit, with very real political ramifications not least in support for the eu.

Mr barniers push for realism at a meeting of eu ambassadors on wednesday was met by a retort from belgium that fishermen in its city of bruges can claim rights in british waters in perpetuity because of a privilege granted by king charles ii of england in 1666. diplomats insisted the remark was made in jest, even if it showed the historical depth of fishing ties.

Under international law, countries sovereign fishing waters known as exclusive economic zones stretch as far as 200 nautical miles from the coast, or less if they bump up against another countrys eez first. one consequence of brexit is that the uk will reclaim its own eez, removing those waters from eu fisheries management.

Under the eus common fisheries policy, waters are pooled, and fishing rights in different areas are allocated to national fleets using a longstanding formula.

Diplomats noted that fishing rights enjoyed up to now by the uk in the residual eu eez are worth around a fifth of those enjoyed by the eu27 in uk waters.

According to data from the uks marine management organisation, between 2012 and 2016, the uk fleet landed an annual average of 94,000 tonnes of fish per year valued at 106m from the eu27 eez; the eu27 fleet, by comparison, landed an average of 739,000 tonnes per year, worth 521m, from uk waters over the same period.

Among the valuable species caught by uk fishing boats in eu27 waters are sole, plaice and mackerel.

An uk official said the gap between the two sides in the future relationship talks remained significant both in terms of fishing quotas and access. we are not going to do a deal that sells out the uk fishing industry as in 1973, the official said, in a reference to the negotiations that preceded the uks accession to the european economic community.

The eu must realise the current arrangements are going to change one way or another. there needs to be more realism from the eu and urgently.

The official pointed to comments from david frost, the uks chief negotiator, earlier this week when he stressed that eu fleets net nearly half the fish caught in uk waters and that this needs to change.