The plan, which has influential support in Germany and France, proposes to set up a "Synchronised Armed Forces Europe", or Safe, as a first step towards a true European military force.
The move comes as France, a supporter of an EU army, prepares to rejoin Nato and to take over one of the Alliance's top military posts. General Charles de Gaulle withdrew French forces in 1966.
Geoffrey Van Orden MEP, the Conservative European defence spokesman, warned that British ministers are "in denial".
He said: "They are sleepwalking towards a European army and seem to have little awareness of what is going on."
The EU proposals, drafted by Karl von Wogau, a German MEP, envisage a "dynamic to further development of co-operation between national armed forces so that they become increasingly synchronised - this process [should] be given the name Safe".
There are also plans to create an EU "Council of Defence Ministers" and "a European statute for soldiers within the framework of Safe governing training standards, operational doctrine and freedom of operational action".
Hans-Gert Poettering, the European Parliament's President and close ally of German Chancellor Angela Merkel, has supported Safe as a "link" to the "objective of a European army".
"Safe can broaden the debate on the right steps towards closer synchronisation, bringing in those people who cannot yet conceive of a European army," he said in a recent speech.
President Nicolas Sarkozy's will use a summit marking Nato's 60th birthday celebrations in April to pledge France to the Nato's military command structure.
Mr Van Orden, a former Brigadier-General who served at Nato HQ in the 1990s, is concerned that in the process the Alliance "is going to be skewed to suit the EU".
"A key element of a likely deal is to give France something Britain has never had - one of the top two military posts in Nato," he said.
France is expected to play a key part in shaping Nato's future role by taking the job of Supreme Allied Commander Transformation, or Sact, a post traditionally held by a United States Flag or General officer.
"We are giving a nation, which for nearly 50 years has been committed to marginalising Nato and building European structures to exclude the Americans, the job of re-jigging the transatlantic Alliance," said Mr Van Orden.
On Tuesday, Caroline Flint, Britain's Europe Minister, insisted: "Let me be clear - there are no plans for a European army."
