The Danish Foreign Ministry refused to comment on the report, saying discussions were ongoing to determine the level of foreign aid in the 2003 budget.
If Denmark does trim its foreign aid, the country will no longer be able to claim the distinction of being the world's largest per capita contributor of assistance to developing countries.
The ministry said Denmark's foreign aid for this year was 1 percent of the gross national product. But if the newspaper report is confirmed, the percentage would drop to 0.88 percent.
Denmark already slashed its aid to developing countries by 1.5 billion kroner in 2002, arguing it needed to inject the money into the country's sagging health care system to reduce hospital waiting queues.
The country's Liberal-Conservative minority coalition headed by Prime Minister Anders Fogh Rasmussen could find itself in an awkward position if the foreign aid budget is indeed slashed.
Acting on behalf of the Danish EU presidency, Rasmussen and Foreign Minister Per Stig Moeller are due to open the UN World Summit on Sustainable Development in Johannesburg on Aug. 26, where they will be expected to appeal for increased aid to developing countries.
Denmark is scheduled to present its foreign aid budget the following day.
The Danish government, which relies on the far-right Danish People's Party for informal support in the Parliament, has been heavily criticized since its arrival in power in November following moves to cut foreign aid and curb immigration.
On June 12, Rasmussen said he supported a proposal made by British Prime Minister Tony Blair to impose European Union sanctions on "third" countries that are unwilling to accept illegal immigrants coming from those countries.
Rasmussen was in London on June 12 to hold talks with Blair prior to the upcoming Danish EU presidency.
The two plan to lead a proposal at this week's EU summit in Seville to find a common EU strategy for immigration and asylum seekers.
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