The European Union has proposed a two-euro flat fee on billions of small parcels sent directly to people's homes, which mainly come from China at the moment.

The new tax would mean that packages worth less than 150 euros (£126) are no longer customs-free.

Online marketplaces, including Chinese giants Temu and Shein, would be expected to pay the fee, said EU Trade Commissioner Maros Sefcovic.

Last year, 4.6 billion such parcels entered the EU, with more than 90% coming from China.

Such a volume had created a huge workload for EU customs staff, Sefcovic said. He argued it had presented challenges in ensuring the safety and standard of goods entering the bloc was properly checked.

The proposed fee would "compensate the cost", he told the European Parliament. Brussels also hopes some of the revenue generated will go towards the EU budget.

The two-euro fee will apply to packages sent directly to consumers, while parcels sent to warehouses would be taxed at a lower rate of 0.50 euros (£0.42).

The EU's move comes after the US's new tariffs on Chinese goods under President Donald Trump's administration - which include a fee on small packages.

Following negotiations last week, the tariff on small packages worth up to $800 (£606) was revised down to 54% from 120%. However a flat fee per parcel of $100 remains.

There had been fears that the Chinese e-commerce giants could then flood the European market with cheap goods, as products originally destined for the US would have to be dumped elsewhere.

European retailers have complained before that they face unfair competition from overseas competitors, who they argue do not comply with the EU's strict product standards.

Shein and Temu have previously said they would co-operate with regulators and consumer standards. Temu says it has 92 million users in the EU, while Shein has said it has over 130 million.

Prior to the US tariffs, platforms like Shein and Temu had relied on the so-called "de minimis" exemption to ship low-value items directly to customers in the US without having to pay duties or import taxes.