On Sunday Ross Finnie, a Liberal Democrat minister in Scotland's coalition administration with Labour, said the Scottish executive is looking at ways of funding its own plan to dispose of surplus sheep.

The BBC's Nicholas Jones: "This is being seen as the first real financial test of devolution"

He told BBC One's Countryfile programme: "What we are trying to see is if there is any way of actually producing a scheme that would take these cast ewes off farmers.

"It has got a price tag to it, it is not an easy one, but I have closed no doors," he said.

Mr Finnie's statement follows an announcement from Christine Gwyther on Friday that the Welsh Assembly was considering a plan to cull all the surplus ewes in Wales, and if necessary would raid the Welsh budget to pay for it.

Finnie: "No closed doors"

However, Agriculture Minister Nick Brown has ruled out using money from his budget to pay for such plans in England.

Mr Brown, who has blamed farmers' overproduction for the current crisis, believes such a scheme would not be allowed under European Union rules.

However, BBC Political Correspondent Nicholas Jones says that under devolution Scotland and Wales do have some power to act independently, and the move is being as the first real, financial test of devolution.

Sheep prices slump

Sheep farmers across the UK say they are facing ruin with prices at a record low following new health regulations brought in after the BSE crisis, and the strength of sterling.

Gwyther: Could raid budgets

Last year, farmers did not sell sheep because the prices had dropped, and so this year there is a backlog of tens of thousands of sheep on farms which say they cannot afford to keep them.

Welsh farmers have been dumping dozens of calves and ewes in telephone boxes and leaving them with the RSPCA in protest. Scottish farmers have also threatened direct action.

Government admits crisis

Environment Minister Michael Meacher admitted on Saturday that farmers were facing their worst crisis since the 1930s.

Too expensive to keep, too cheap to sell

"There is no doubt that we do have the worst crisis in agriculture for many, many years. That is a situation we inherited, we have of course got to deal with it, but it is not of our own making," he said.

Although Mr Brown has ruled out cash aid for farmers, a Downing Street spokesman said he was meeting farmers to discuss the crisis next week.

But opposition parties urged him to act more urgently. Tory Party chairman Michael Ancram has said the government should bolster the ailing sheep market by taking action against imports from abroad.

And Liberal Democrat chief whip Paul Tyler has written to Tony Blair and the Conservatives appealing for a cross-party initiative.