STRASBOURG, France (Reuters) - Bulgaria and Romania received the green light on Tuesday to join the European Union in January, rather than a year later, but under the toughest terms imposed on any new entrants.

In a recommendation on what could be the EU's last expansion for years, the European Commission listed reforms the Balkan duo must complete to avoid being deprived early on of full membership benefits, including some of their huge EU aid.

"Accession of Bulgaria and Romania will mark a historic achievement ... which further pursues the reunification of our European family," European Commission President Jose Manuel Barroso told the European Parliament.

EU leaders are to approve the recommendation in October. France, Germany, Denmark and Belgium have yet to ratify the accession treaty, but this is unlikely to be a hurdle.

It will be the EU's second wave of enlargement into ex-communist eastern Europe, locking the Black Sea neighbours into the zone of stability and prosperity and promising a boost to their fast-growing economies.

"This is the genuine and final fall of the Berlin Wall for Bulgaria," said Bulgarian Prime Minister Sergei Stanishev, referring to the 1989 fall of communism in eastern Europe.

The tough entry conditions reflected concern about the countries' shortcomings, including rampant corruption, organised crime and food safety standards, and doubts over their ability to administer billions of euros in EU aid properly.

"Bulgaria and Romania will enrich the Union without compromising the proper functioning of EU policies and institutions. The interests of the EU and our citizens can be assured and EU taxpayers' money protected," EU Enlargement Commissioner Olli Rehn said.

FEARS OF MIGRATION

Bulgaria and Romania may also face curbs on labour migration, not least because their economic output per capita is around one-third of the EU average.

Britain, Ireland and Sweden, which opened their job markets for workers from the 10 countries that entered the EU in 2004, are considering restrictions for Bulgarians and Romanians.

The possible sanctions, which may be applied up to three years after the countries' accession, are meant to reassure the growing number of enlargement's critics who say the two countries are too poor, corrupt and weak administratively.

Barroso repeated on Tuesday that once Romania and Bulgaria joined the EU, the bloc should not enlarge further until it has reformed its creaking institutions.

"This is the way to ensure that our enlarged Union will function in an efficient and harmonious way," he said in a statement that may irk candidates Croatia and Turkey.

"Enlargement fatigue" helped sink the EU constitution in French and Dutch referendums last year, robbing the bloc of a framework for further expansion. The current treaty provides for a maximum of 27 members before institutional changes are needed.

The EU could have delayed Romanian and Bulgarian entry until 2008, but this would have humiliated the two nations.

Both states will have to complete mechanisms to allocate billions of euros in farm subsidies and regional aid. If they do not, Brussels may freeze part of the funds.

Bulgaria will be required to amend its constitution to remove ambiguity about the independence and accountability of the judicial system. Romania must strengthen its top court and establish an agency to verify the assets of senior officials.

Failure to meet these targets could mean other EU members might refuse to recognise judgements of the newcomers' courts