Romania has admitted it has sent 105 children for adoption in Italy despite its ban on international adoptions.
The ban was introduced in 2001 at the request of the European Union.
British MEP Baroness Emma Nicholson has strongly condemned the incident as a "flagrant breach of the UN Convention of the rights of the child".
The controversy comes at a delicate moment for the Romanian government, which hopes to complete EU entry talks this year and join the bloc in 2007.
Baroness Nicholson, who's championed the cause of children's rights in Romania for years, told the BBC she was gravely worried about what appeared to be a serious breach of the country's international commitments.
Some 800 Romanian orphans were sent abroad since a 2001 ban
She said the children were sent to Italy as a result of an agreement between Prime Minister Silvio Berlusconi and his Romanian counterpart Adrian Nastase.
But Mr Nastase said these were cases where adoption procedures had already begun and the children were despatched to Italy under a special government decision that left no room for corruption.
"There were many families that had special bonds with certain children, they were actually living with them in Romania," he told journalists at a press conference in Bucharest.
Caught in the middle
He said that, since the ban on international adoptions was introduced in 2001, 800 exceptions had been made, compared to 10,000 international adoptions in the previous period.
The US pressurised Romania to lift the ban as a condition to its admission to Nato two years ago, and other countries, like Italy, Spain and France, have also lobbied hard for adoptions to resume.
Mr Nastase said Romania was caught in the middle, between foreign governments exerting strong pressures for adoptions to be resumed - and the EU, which wants the ban to stay until Romania introduces tough new controls to prevent the trafficking of children.
No-one denies that the situation has vastly improved since the fall of communism 15 years ago, when tens of thousands of children filled Romanian orphanages.
But Emma Nicholson, who is drafting a report for the European Parliament on Romania's preparedness for the EU, said they could make no compromise on human rights.
And the Dutch MEP Arie Oostlander has called for the suspension of entry talks with Romania until it improves its human rights record and tackles widespread corruption.
"Negotiating all those technicalities about the economy, fisheries, energy and the environment makes no sense if Romania is not really developing into a democratic state respecting the rule of law," he said.
The European Parliament will make its recommendation on Romania next month, but entry negotiations can only be suspended by EU governments on a recommendation by the European Commission.
Commission officials say they are investigating the case, which they consider as serious, as well as helping Romania to reform its adoption laws.
"But we are not sure that the momentum would continue if we suspended the talks," one official said.