Cash to help people suffering extreme poverty in the EU was backed in aEuropean Parliament vote but the Government said food aid was better decided nationally rather than by Brussels.
The Department for Work and Pensions (DWP) insisted taking the funding would mean other schemes missed out and stressed that Britain was not losing the cash.
But Labour's Richard Howitt, who became involved in negotiating the fund after calls for help from the Trussell Trust charity, said the block would mean British food banks would lose out on £3 million from funds allocated to the UK.
The MEP said: "It defies belief that the Conservative-led Government has sought to block a fund for the most deprived, that their MEPs have voted against it today and even after it is agreed that they will still prevent Britain's food banks from claiming from it."
Between April and December last year more than 500,000 people, of whom one-third were children, received emergency supplies from the 400 food banks run by the Trussell Trust.
A DWP spokesman said: "We are not saying no to this money but we are saying no to Europe about how it should be spent.
"If we accepted the funding it would be taken off our structural fund budget which helps disadvantaged people into work.
"This is how similar funding has been used in the past - for employment skills and social inclusion.
"Just to be clear we aren't losing money."