Prime Minister Peter Magyar launched a reform drive upon winning office this year, aiming to regain access to more than 16 billion euros that Brussels had frozen over rule-of-law concerns during nationalist leader Viktor Orban's rule. 

"Hungary has taken important steps to strengthen the rule of law and protect the Union's financial interests," EU chief Ursula von der Leyen said.

"Today, we are proposing to unlock 4.2 billion euros and reopen the doors of Erasmus+ and Horizon Europe to Hungarian students and researchers."

The plan needs to be approved by member states within a month, the commission said.

It cited reforms on public procurement and tackling corruption including reinforcing the powers of an anti-graft watchdog, and the establishment of a comprehensive asset declaration system among the reasons for the decision.

Controls over EU funding as well as transparency in public procurement and public spending have also been strengthened, the commission added.

"With the important steps taken by the government of Prime Minister Peter Magyar to safeguard EU taxpayers' money, billions of euros can now flow again," said Piotr Serafin, the EU commissioner for budget, anti-fraud and public administration.

The EU froze billions of euros in funds earmarked for Budapest because of democratic backsliding, graft concerns and the restriction of LGBTQ rights under Orban.

Pro-EU conservative Magyar defeated Orban in April elections running on an anti-corruption ticket, with securing the EU money as a key electoral pledge.

The prime minister has said the funds add up to about 13 percent of Hungary's budget and could help his government revive the country's flagging economy.

The 4.2 billion euros Brussels moved to unlock Wednesday, were withheld in 2022 from financing Budapest was due to receive under a funding pot aimed at reducing economic disparities across the 27-nation union.

That same year, almost two dozen higher education institutions, including some of Hungary's top universities, were excluded from the EU's Erasmus+ scheme after they were moved into an ownership set-up that critics said allowed for excessive government influence.

Magyar is pushing for the release of about 12 more billion euros that Brussels promised to unlock in May, provided Hungary stayed on track with its reform drive.

But Daniel Freund, a prominent European lawmaker and anti-graft campaigner, said that while Budapest's efforts were welcome, the commission was moving too fast in rewarding them.

"The ink on the new laws has barely dried before the Commission is already dropping all proceedings aimed at protecting EU funds," the German parliamentarian with the Greens group said.

"We do not know how well the reforms will work in practice".