Milk from cows that test positive for tuberculosis (TB) would be introduced into the human food chain under reforms suggested on Tuesday by government advisers on farming.

More than 200 reforms to existing food safety and environmental regulations governing farmers and food producers have been put forward by the farming regulation taskforce, which reported to ministers from the Department for Environment, Food and Rural Affairs (Defra) on Tuesday. The group, made up of nine farming and food industry professionals, was set up last July, with the aim of scrapping swaths of legislation put in place over several decades to protect wildlife, the environment and human health. But farmers and food companies say some of the plans represent unfair and costly curbs on their freedom to do business.

Some of the proposed reforms are likely to be controversial, including softer tests on the use of pesticides, fewer inspections of farms, and more weight to be placed on private sector inspectors for the food sector rather than publicly appointed monitors, as well as potential restrictions on rights of way for ramblers.

The prospect of products from potentially TB-infected animals being sold to consumers would represent a marked change from current policy. Not all cows that test positive for TB are carriers of the disease, as other infections can also lead to a positive result, and pasteurisation should kill any TB bacteria that could be present in milk.

Under current rules, however, all animals that test positive are slaughtered and compensation paid, and their milk prevented from reaching the food chain. These rules exist partly because some farmers have attempted to relabel their cattle as TB-free by swapping cows with other herds, and because "raw" or unpasteurised milk can legally be sold in the UK, meaning that raw milk from TB cattle could enter the food chain if the rules are not well enough enforced. But the taskforce has suggested that pasteurised milk from "TB-reactor" cattle could be rendered suitable for some form of consumption.

Other proposed measures include reducing the burden of paperwork for farmers, which can entail presenting the same information several times over for different bureaucratic purposes, and easier planning permission for farm developments.

The taskforce also wants to make it easier for unemployed people to take on much-needed seasonal work on farms, without facing disincentives such as losses to their benefits.

The taskforce said: "The key strategic message from our report is that Defra, its agencies and delivery partners need to establish an entirely new approach to and culture of regulation – otherwise the frustration that we, farmers and food-processing businesses have felt will continue. The essence of this approach is about strengthening the partnership between government and the farming and food-processing industries."

However, Gareth Morgan, head of countryside policy for the RSPB, said that the report was milder than had been expected. "This is not the bonfire of regulations that we had feared," he said. "But there are still concerns."

He pointed in particular to nitrates, which are included in the report. He said the regulation of nitrates entering the water supply could be weakened if the government adopts new rules before the European Union has put forward its proposals.

The government will have to decide which reforms from the report it takes forward and which it abandons, in what is likely to be a fiercely contested battle over the future of countryside regulation.

Agriculture minister Jim Paice said: "This is an impressive piece of work with strong recommendations for reducing the burden that red tape has on the people who produce our food... This was never about a bonfire of regulations but about changing the culture of how we apply and enforce regulation. We will continue to defend our high standards for environmental management, animal welfare and food safety. I am particularly interested in the recommendations to allow industry to earn our trust and reward good practice with less frequent inspections."

The taskforce made clear that the direction of future policy should be towards lighter regulation, and that farmers should play a key role in determining what rules might be laid down in future. Richard Macdonald, chair of the taskforce, said: "We've listened to what farmers and food producers have to say about how regulations and processes could be improved without reducing standards; things like a simpler livestock movements regime, reducing paperwork associated with nitrate regulations and improving bureaucracy around the common agricultural policy. We've also looked at the big picture and recommend a new approach to regulation based on trust, responsibility and partnership between government and industry. Our recommendations won't all be easy but they are credible and, I believe, now is the time for change."

He added: "The farming and food processing industries need to contribute to economic recovery and produce more food in a sustainable and safe way. To make this happen, the government needs to change the way it deals with them. By accepting our recommendations Defra will show that it is prepared to do this. It is now for Defra, its agencies and delivery partners, and industry to respond to the challenge."

But Morgan said consumers might not agree with the direction taken. He said: "The taskforce was set up to find ways to deregulate first, and to maintain standards second. But it should have been the other way round - ministers should be asking how can we find a way to do better for society, and if necessary we will regulate to do so. I'm worried about the government's approach."

Agriculture, the taskforce noted, accounts for £7bn per year to the UK's economy and employs 534,000 people, while many more are employed by the wider food sector and the rural economy.