Eurostat has accepted that Cornwall, west Wales and the Valleys could be classed as statistical areas in their own right, allowing them to qualify for objective 1 status, but the Isle of White was rejected as too small.
The island, which was hoping for at least£20m-£30m to spend on a new airport, roads, business parks and training, is joined with its wealthier neighbour Hampshire for statistical purposes.
John Bentley, economic development manager at the council, said: 'Gross domestic product per head was 65% of the EU average in 1995, but by putting us together with Hampshire that became 99%.'
Jan Soderman, the ombudsman, has only advisory powers, and the island faces a race against time to get a ruling before regional aid is decided in March. If it fails to get Objective 1, it hopes to persuade the UK government to propose it for Objective 2.