The EU's executive arm, in a report to the European Parliament in
Strasbourg, said that it would study their progress in coming months and recommend by October whether they should be allowed to join next January.
"No later than early October we will review the situation on those outstanding issues," said commission chief Jose Manuel Barroso, while adding that "The possibility of being ready in 2007 is double."
Speculation has been rife that one or both countries could be turned away until 2008 as their progress on reforms waned, and "enlargement fatigue" set in among a European public disenchanted with continued expansion.
The decision will be a stark warning to Turkey, Croatia and Macedonia, who have all been accepted as candidates for EU membership, that the long road to the rich European club could be a rocky one.
"It is our goal to welcome Bulgaria and Romania in 2007 and it is our duty as the guardian of the (EU) treaties to ensure that once they join they really meet the conditions," Enlargement Commissioner Olli Rehn said.
In a monitoring report on each of the Balkans hopefuls, the commission listed 10 "areas of serious concern", six for Bulgaria and four for Romania, that it said "require urgent action".
In Bulgaria's case corruption was singled out. "Bulgaria needs to seriously intensify its efforts to crack down on organised crime and corruption," said Mr Rehn.
The report called for an "intensified enforcement of anti-money laundering provisions" and "more effective and efficient implementation of laws for the fight against fraud and corruption."
Romania was told to better prepare its tax system to match that of the EU and address outstanding agricultural sector issues.
"This is a just and carefully calibrated approach that ensures the continuation of reform in both countries up to and beyond accession," Mr Barroso told reporters later.
When a recommendation finally comes, EU leaders will use it when they meet in Finland in October to decide whether to change the January entry date, set down in the accession treaty the two countries signed in April 2005.