Poland's Constitutional Tribunal ruled last week that parts of EU law are incompatible with the Polish constitution, undermining the legal pillar on which the union stands and raising fears that Poland could eventually leave the bloc.
Poland's ruling nationalist Law and Justice party says it has no plans for a "Polexit" and - unlike Britain before its Brexit referendum in 2016 - popular support for membership of the EU remains high in Poland.
Nevertheless, other member states have been dismayed by Warsaw's defiance of the EU, including Prime Minister Mateusz Morawiecki's complaint in a letter on Monday of mission creep that he warned would lead to a "centrally managed organism, governed by institutions deprived of democratic control".
Speaking ahead of Morawiecki in a debate on the row in the EU's parliament in Strasbourg on Tuesday, European Commission President Ursula von der Leyen laid out three options for a response to the Polish court's attack on the primacy of EU law.
"The European Commission is, at the moment, carefully assessing this judgment. But I can already tell you: I am deeply concerned," she said. "This ruling calls into question the foundations of the European Union. It is a direct challenge to the unity of the European legal order."
She said a first option is so-called infringements, where the European Commission legally challenges the Polish court's judgment, which could lead to fines.
Another option is a conditionality mechanism and other financial tools whereby EU funds would be withheld from Poland.
Until Warsaw's clash with Brussels is resolved, it is unlikely to see any of the 23.9 billion euros in grants and 12.1 billion in cheap loans that it applied for as part of the EU's recovery fund after the COVID-19 pandemic.
The EU could even block Polish access to EU grants for development and structural projects in the 2021-2027 budget worth around 70 billion euros.
Von der Leyen said a third option is the application of Article 7 of the EU's treaties. Under this, rights of member states - including the right to vote on EU decisions - can be suspended because they have breached core values of the bloc.
Morawiecki, speaking next in the EU assembly, accused the bloc of overstepping its authority.
"EU competencies have clear boundaries, we must not remain silent when those boundaries are breached. So we are saying yes to European universalism, but we say no to European centralism," he said.
A succession of members of the parliament then stood up to castigate the Polish leader, while some EU ministers gathering for a meeting in Luxembourg joined the chorus of criticism.
Finland's minister for European affairs said compromise could not be the solution and the European Commission must act.
"We do not want to escort anyone out," Tytti Tuppurainen told reporters. "We respect the wish of the Polish people to be inside the EU and continue as members of the EU, but we will not compromise the value base of the EU."
(By Jan Strupczewski and John Chalmers; Additional reporting by Kate Abnett, Sabine Siebold, Philip Blenkinsop and Robin Emmott; Writing by John Chalmers)