Enterprise Commissioner Guenther Verheugen (pictured) also wants to put a stop to toys being used as gifts in food items such as confectionary and cereals.
The draft proposals form part of an overhaul of EU toy safety standards, which are to be published next week.
However, the document doesn’t include the idea of a mandatory EU-wide standard to replace the self-regulated CE mark.
A source at the EU executive’s arm said: "The European Commission is proposing significant reductions in lead paint, carcinogens and other products which can cause allergies."
Exact levels are yet to be formally agreed, however the spokesperson said the move would all but eliminate substances such as lead and nickel from toys.
Toy Industries Europe (TIE), which represents Mattel, Hasbro and Hornby say any reductions must be backed up by scientific proof.
A spokesperson for the TIE said: "We accept that there will be changes and there has to be compromise. But all we are asking for is that the thresholds set are done so with a scientific explanation.
"The rules need to be updated as they are ten years old, but in principle they have been working well and our companies take toy safety very seriously, which is reflected in the recalls."
Before coming into force, the draft proposals would require agreement form the EU’s 27 member states and the European Parliament.