The inquiry is set to propose allowing the sale of alcohol from privately owned farm shops, both made on site but also imported brands, according to the Dagens Nyheter (DN) daily.

The question has split the ruling centre-right Alliance government.

The Moderates and the Centre Party are in favour of the proposal, while the Liberal Party and Christian Democrats are against it, who argue that it may risk the future of the Swedish alcohol retail monopoly, Systembolaget.

Liberal party economic policy spokesperson Carl B. Hamilton argued that the EU could challenge Systembolaget’s exemption from EU competition rules that it was granted when Sweden entered the union in 1995.

“For those who wish to maintain a restrictive alcohol policy, there are major risks with the proposal,” Hamilton told DN on Wednesday.

The Christian Democrats also expressed concern over Systembolaget’s monopoly in Sweden, with economic policy spokesperson Anders Sällström arguing that it could “loosen” Systembolaget’s monopoly.

According to EU law expert Lotty Nordling, who leads the inquiry, the proposal to extend legislation to the sale of imported liquor as well as locally produced, has been developed in response to EU criticism of a similar system in Finland which it is claimed favours domestic brands.

However, the proposal does include limits: 1 litre of spirits, 3 litres of wine or 5 litres of beer per person. Total annual farm alcohol sales would be restricted to 10,000 litres annually.

According to a recent Sifo poll, Swedish support for Systembolaget’s monopoly has fallen for the first time in years, but remains popular with around 66 percent backing the status quo.

The inquiry is set to be concluded by the end of the year, while legislative proposals will likely be developed during 2011.