EU chief Ursula von der Leyen on Friday warned Turkey's leader not to jeopardise a push for better ties with the bloc by inflaming tensions on an upcoming trip to Cyprus.

President Recep Tayyip Erdogan has said he will travel to Turkish-controlled northern Cyprus on July 20 for the anniversary of Ankara's 1974 invasion that led to the division of the island.

The controversial visit comes as the EU -- of which Cyprus is a member -- is looking to improve ties with its strategic eastern neighbour after tensions spiked in the eastern Mediterranean last year.

"This is a very sensitive topic for us. And we are very clear that we will of course observe how this visit will go and that we will never, ever accept as a European Union a two-state solution," von der Leyen told a press conference after an EU summit in Brussels. 

"These clear messages have been sent. I said it personally to the president. So it's up to him now to set a positive signal."

Cyprus remains one of the major bones of contention between the EU and Ankara, after a push for two states from Turkish-Cypriot leaders backed by Erdogan helped torpedo efforts in April to restart peace talks. 

Cyprus has been split since 1974, when Turkey occupied the northern third in response to a coup by an Athens-backed junta seeking to annex Cyprus to Greece.

The island is divided between areas controlled by EU member the Republic of Cyprus and the breakaway Turkish Republic of Northern Cyprus, recognised only by Ankara.

Erdogan sparked anger from the Greek-speaking south last year with a visit to the beachfront area of Varosha, a one-time luxury resort turned ghost town along a UN buffer zone.

The EU in March held out a string of incentives to convince Erdogan to make good on pledges to mend fraught relations with the bloc. 

But EU leaders meeting Thursday left Ankara disappointed, issuing a critical statement on rights in Turkey and failing to make clear progress on a customs treaty or committment on aid. 

Brussels is readying a plan to provide Turkey with 3.5 billion euros ($4.2 billion) in extra funding from 2021 to 2024 to help it host millions of refugees from Syria.

The leaders told the European Commission executive body to present a formal proposal "without delay".

The Turkish foreign ministry said the statement "came well short of what was expected or necessary".