Euro-MPs will meet on Wednesday in a bid to rush through plans to freeze the assets of 27 organisations and individuals suspected of involvement in terrorism.
The 27 are all Muslim-based and include Osama bin Laden and his Al-Qaida terrorist support group - the list could eventually be widened to include established European terrorist organisations such as the IRA and Eta.
The European Commission needs the formal approval of MEPs if the measures are to be brought into law by EU foreign affairs ministers at talks next week. The Commission has asked MEPs to act with "the utmost urgency".
Liberal Democrat MEP Graham Watson, chairman of the European Parliament's home affairs committee, said: "The committee will be holding an emergency meeting so that we can recommend to the full Parliament our support for these measures."
He went on: "However, I am concerned that the list proposed by the Commission is purely concentrating on Muslim bodies when it should include European terrorist groups.
"I will be recommending to the EU ministers that they amend the list and take steps to ensure that the surprising omission of groups like the IRA and Eta is rectified."
Mr Watson added: "I am also concerned that there is no provision made on this proposal for compensating businesses affected by the freezing of assets and which subsequently are found to be innocent.
"Otherwise there could be serious consequences for some Muslim firms and a rise in racist feeling."
Mr Watson also wants a "sunset clause" added to the plan to ensure the measures can be reviewed and altered easily - unlike Britain's Official Secrets Act which, said the MEP, was rushed in in 1911 under similar emergency circumstances.
The Commission proposal is that the 15 member states freeze all funds held in the EU or transferred within it by any of the 27 organisations and individuals named as suspected of supporting and financing terrorist activities.