Iceland could win early European Union membership, a top European Commission official was quoted as saying on Friday, amid expectations it will apply for entry to help stave off its financial crisis.

"The EU prefers two countries joining at the same time rather than individually. If Iceland applies shortly and the negotiations are rapid, Croatia and Iceland could join the EU in parallel," EU Enlargement Commissioner Olli Rehn was quoted as saying by British newspaper The Guardian.

Croatia hopes to conclude accession talks with the bloc later this year and to join in 2011.

"Iceland will be treated according to its own merits, but because it is a member of the European Economic Area, its negotiations would go relatively fast," Rehn spokeswoman Krisztina Nagy said of the zone that includes the EU's 27 states plus Iceland, Liechstenstein and Norway.

"It already has in place a lot of legislation that is harmonised with European Union legislation," she added.

A spokesman for the EU presidency, currently held by the Czech Republic, added: "Iceland is a country with which we share values." He said its legislation was already to an extent aligned with the EU's body of law.

Iceland's financial system collapsed last year under the weight of billions of dollars of foreign debt accumulated by its banks. The woman expected to become the new prime minister said on Thursday that talks on forming a centre-left government were set to wrap up on Friday and that it would take office the following day.

Johanna Sigurdardottir's Social Democratic Party is talking with the Left-Greens on a new administration after protests helped force out her predecessor, Geir Haarde of the Independence Party.

The talks need to find common ground on many issues, including whether to apply to join the European Union at all.

The Left-Greens are more cautious about EU membership than the Social Democrats, although the parties broadly agree there should be a referendum on whether to open EU accession talks.