European Commission chief Ursula von der Leyen on Wednesday warned Hungary to reverse course on its controversial LGBTQ law, as pressure mounts on Brussels to cut EU funding to Budapest.

Hungary's strongman Prime Minister Viktor Orban is facing a mounting chorus of protest over the law, which is due to go into effect on Thursday.

Orban insists it is a measure to protect children, but critics say the law conflates paedophilia with homosexuality and generally stigmatises support for the LGBTQ community.

Now, Brussels is considering legal action against the EU member state, and is also considering linking the disbursement of post-Covid recovery funds to the law's repeal.

"It is a disgrace this legislation... It is something that flies in the face of the values of the European Union," von der Leyen, who heads the EU executive, told the European Parliament in Strasbourg.

"If Hungary does not rectify the situation, the commission will use its powers available as the guardian of the treaties."

Hungary has for years defied the EU with authoritarian-style laws that critics say hamper free speech as well as threaten the independence of the country's judiciary.

The European Commission has launched several legal procedures against Budapest, including a threat to strip it of EU voting rights, but it went nowhere after Poland and Hungary blocked the process.

Hungarian prime minister Viktor Orban. Photo: AFP

Free to 'love'

The latest dispute if over a law, titled the "Anti-Paedophilia Act", that was originally billed as toughening punishments for child abuse.

But its final draft contains amendments that include a ban on the "display or promotion" of homosexuality to under-18s, and restrictions on sex education as well as media content. 

"Europe will never allow parts of our society to be stigmatised, be it because of whom they love, because of their age, their ethnicity, their political opinions, or their religious beliefs," von der Leyen said.

Any legal action launched by von der Leyen would be backed by a majority of member states. This was made clear at a summit last month when EU leaders, led by the Netherlands, upbraided Orban over the law.

Such a heated discussion was "not a common practice" for EU summits, EU Council chief Charles Michel, who hosted the summit, told MEPs.

"Our conversation was necessary, difficult, and at times emotional," he said, proving that LGBTQ rights "are not a marginal issue".

The commission is understood to be planning an infringement proceeding, which amounts to a lawsuit over failure to implement EU law that can lead to fines inflicted by the bloc's top court.

European Commission president Ursula von der Leyen is being pressured by MEPs to do more to stop Hungary. Photo: AFP

But MEPs have called for the commission to use its new powers to hold back coronavirus pandemic recovery cash when their spending defies EU values. 

These powers over the purse strings were part of a great compromise landed by EU leaders last year when agreeing the bloc's €750 billion pandemic recovery fund -- and were fiercely resisted by Orban.

Basing their case on a report commissioned to three academics, MEPs on Wednesday said that the commission must go further to stop the misspending of EU funds by Orban and his close associates.

"We want the EU money to reach the Hungarian people and avoid reaching the Orban family pockets," said Hungarian MEP Katalin Cseh.  

Far-right defends Hungary 

Paolo Gentiloni, the EU's economic affairs commissioner, told reporters in Brussels that discussions were still underway to approve Hungary's seven-billion-euro ($8.3 billion) plan for how it will spend its EU funding.He said the process includes questions over Hungary's commitment to fighting corruption and ensuring transparency as well as the independence of the courts.

Hungarian Justice Minister Judit Varga denounced these as "new demands" that were "obviously" related to the LGBTQ law.

"Brussels can't take away for any political reason what Hungarian people have worked for," she tweeted. 

MEPs mostly backed von der Leyen's tough words for Orban and her threat of legal proceedings, and are expected to back a resolution on Thursday asking the commission to suspend the recovery cash.

But some far-right lawmakers, who are a substantial political force in the European Parliament, said they supported the Hungarian law. 

French MEP Nicolas Bay of Marine le Pen's far-right National Rally party called the targeting of Hungary "scandalous".

"Hungary wants to protect its children against the delusion of gender theory. Budapest is right," he said.