As part of deal to end discarding of edible fish at sea, Maria Damanaki tells MPs some species should go to charities

Fish from European waters will be distributed to the poor as an alternative to throwing them away at sea, the EU fisheries chief told MPs on Thursday, as part of a sweeping reform of marine policy.

Maria Damanaki, the European commissioner for fisheries, said that as part of a proposed new deal with fishermen aimed at ending the wasteful practice of discarding edible fish at sea, lower value fish could be distributed to charities and other public organisations.

Appearing before the House of Commons select committee on environment, food and rural affairs, she said: "We can use these for charitable purposes, [though] we will have to give fishermen compensation if they give fish to the poor."

Damanaki is seeking the most wide-ranging reform of the EU's common fisheries policy since it was formulated more than four decades ago. Key to the reforms will be an end to the practice of discards, by which as much as two-thirds of the catch of some species are abandoned at sea, almost all of them to die. About 1m tonnes are estimated to be thrown back each year into the North Sea alone. Discards are a byproduct of the rules on fishing quotas – when fishermen exceed their allowance, or net species for which they lack a quota, they must throw the excess back.

But the commissioner faces stiff opposition from fishing groups and some member states, because forcing fishermen to land all their catch will mean lower incomes. Current practices allow fleets to discard damaged fish, or lower value species, for which they receive less money, in order to maximise their profits.

Damanaki called on consumers to urge governments, retailers and the fishing industry to abandon discards and manage the EU's fish stocks more sustainably. "We could not do this without the support of consumers," she said. "I would encourage people to make responsible choices [in the fish they eat] and keep up the pressure."

Earlier this year, hundreds of thousands of people signed a petition against discards spearheaded by Guardian food writer Hugh Fearnley-Whittingstall.

Damanaki also wants an end to subsidies paid for scrapping fishing vessels. Although about €1bn was spent on compensation for fishermen who agreed to scrap their vessels between 2007 and this year, the total capacity of the EU fleet rose by 3% a year over that period – in part because fishermen used their compensation money to invest in bigger vessels.

There is already a ready-made model for distributing excess goods from Europe to charities and people on low incomes, in the form of the food for the poor initiative, that covers agricultural products. Lower value catch that cannot be eaten could be turned into fishmeal, used as feed in fish farms. In addition, fishermen would have to receive compensation for any juvenile fish they caught, because allowing them to sell such fish would act as a perverse incentive to catch them.

A few types of fish that can survive after they are thrown back, such as small sharks, would still be allowed to be discarded, under the plans.

But Damanaki acknowledged that the levels of compensation would be difficult to set. "You have to give some money, enough [to encourage fleets] to be honest, but not too much – you want them to use selective gear [that would exclude smaller fish]."

The fisheries commission is seeking €6.7bn in budget for the next seven years, which will be used to help fishermen move out of the industry and find new ways to make a living, such as by turning their boats to leisure uses or pursuing innovative schemes such as rounding up plastic from the seas for recycling. Money will also be made available to build new infrastructure, such as cold storage facilities, to ensure fewer fish go to waste.

Damanaki's proposals are now under consideration by the European Parliament and the EU Council, and will be debated next year. If they pass without a mauling by member states, they could become law as soon as the end of next year.