The 27-nation bloc is scrambling to bolster Europe's defence industry as it looks to support Ukraine and build up its stocks in the face of Russia's invasion of its neighbour.

But there are fears the European Union is lagging behind two years into the conflict as Moscow has ramped up its own output of weaponry by putting its economy on a war footing.

As part of the efforts to get Europe to produce more, Brussels pushed through a 500-million-euro programme earlier this year aimed at ramping up its capacity to make ammunition.

The EU's executive arm released the list of firms the money would go to on Friday, with an official saying three-quarters of the funds were for projects making gunpowder and other explosives.

"The programme will support projects increasing the annual production capacity by more than 10,000 tons of powder, and by more than 4,300 tons of explosives," Brussels said.

"Europe is expected to reach an annual ammunition shell production capacity of 2 million by the end of 2025."

Officials have pointed to a shortage of explosives as one of the key factors hampering artillery shell production in Europe.

The latest funds are part of a raft of initiatives aimed at increasing Europe's defence industry and come as EU leaders are set to focus on the issue at a summit next week.

While the EU insists it is on track to bolster industrial capacity, defence firms have complained that governments are still not placing enough long-term orders.

The EU is set to fall well short of a promise made last year to supply Ukraine with a million shells by this month.

The debate in Europe comes as US support for Ukraine remains blocked and Kyiv's outgunned forces are being pushed back by Russia.